Kumba, which had warned of severe fall in profits earlier this month, said that headline earnings per share for the year to the end of December fell 66 percent to R11.82 with basic earnings per share sliding to R1.46 from R33.44) as a six billion rand impairment charge on its Sishen mine, due to low prices and restructuring costs, took its toll.
“The period ahead is likely to result in formidable changes for the industry with the market now pricing in a more muted trend for the iron ore price. As such the group does not expect a significant recovery in the iron ore price over the medium term,” Kumba said in a statement.
During the year under review, Kumba’s total production fell seven percent to 44.9 Mt and the average iron ore price dropped 42 percent to $56/t but the company did manage to deliver a reduction of R4 billion in controllable costs due to its reorganisation and capital management. It also reduced net debt by 42 percent to R4.6 billion.
Looking ahead, Kumba said that it was acting to save more cash to ensure that it was able to withstand the low iron ore prices for a longer period. It said it expected to deliver $10/t in cost savings over the 2016 year largely due to the implementation of the new mine plan for Sishen, “headcount rationalisation” and salary freezes for senior and mid management.
