Kumba Iron Ore's annual results for the twelve months ended 31 December 2020
23 February, 2021
KUMBA DELIVERS A RECORD EBITDA OF R45.8 BILLION
Themba Mkhwanazi, Chief Executive of Kumba, said, “Kumba delivered a record EBITDA of R45.8 billion while keeping our commitment on health and safety, and supporting our communities as we navigated exceptional conditions. Our business resilience and balance sheet strength, together with the hard work of our dedicated workforce and suppliers, allowed us to meet Covid-19’s challenges from a position of strength. We have emerged stronger and we are even more focused on building a better business for the longer term.
“2020 marks four years and seven months of fatality-free operations, demonstrating that the health, safety and wellbeing of our employees and contractors is our first priority."
“On a broader scale, Kumba responded quickly and comprehensively to the Covid-19 pandemic by supporting the ecosystem in which we operate, enabling us to rapidly resume safe production. Our WeCare programme, covering the four pillars of physical health, mental health, living with dignity and assisting our communities, has become part of our daily operations and supplements the essential services provided to our local communities."
“Our EBITDA margin rose to 57%, up from 52% in 2019 as we adapted our value chain and capitalised on our high quality iron ore products. Together with the strengthening price, this allowed us to achieve a 19% higher average realised FOB export price. Our strong cost discipline provided further margin protection and resulted in savings of R1.3 billion, including R613 million of Covid-related savings. This brings our cumulative and sustainable cost savings to R3.2 billion since initiating our programme in 2018. We worked closely with and supported our logistical partner, Transnet, to regain its pre-Covid run-rates, while drawing down on high finished stock levels as we further improved the efficiency of our value chain. For the full year, we achieved production of 37.0 Mt and sales of 39.7 Mt."
“Kumba’s strong net cash generation, which delivered R20.7 billion of free cash flow, has supported the Board’s decision to declare a final cash dividend of R41.30 per share. Combined with the interim cash dividend of R19.60 per share, the total cash dividend for the year increased by 30% to R60.90 per share, representing a payout ratio of 86% of headline earnings."
“Kumba is realising its ambition to extend the life-of-mine to 2040. We have increased the Sishen life-of-mine to 2035 through pit optimisation and the Board has approved the ultra-high dense media separation (UHDMS) project. This will maximise product quality and extend Sishen’s life-of-mine to 2039. We are also developing our Kapstevel South mine at Kolomela, while continuing our exploration programme in the Northern Cape as we develop our resource pipeline."
“The Covid-19 pandemic has been catastrophic for many and a full global economic recovery may take years. However, the quality of our assets ensures sustained demand, while our capital discipline and focused strategy enables us to invest in building a better business that will continue to create enduring value for all our stakeholders.”
KEY FEATURES
STRONG EARNINGS GROWTH OF 40%
- Attributable free cash flow of R20.7 billion up by 21%
- ROCE of 109%, up from 83%
- Final cash dividend of R41.30 per share, total cash dividend of R60.90 per share
CREATING ENDURING VALUE
- Four years and seven months of fatality-free production
- No occupational diseases
- Over five years without any level 3-5 environmental incidents
- R60 billion of shared value, including R93 million of Covid-19 community support
RESILIENT AND SUSTAINABLE BUSINESS
- Average realised FOB export price of US$115/tonne
- Cost savings of R1.3 billion, keeping C1 costs at US$31/t
- Protected EBITDA margin of 57%, up from 52%
- Sishen life extension potential to 2039 with R3.6 billion UHDMS project approved in February 2021
Download the Annual Results for the year ended 31 December 2020