Dip in full-year headline earnings for Kumba Iron Ore

Kumba Iron Ore, a unit of Anglo American, on Thursday reported a dip in full-year headline earnings, but said production and export sales were up, and output would rise further in 2010.

South Africa’s Kumba, the continent’s biggest producer of iron ore, said basic headline earnings per share for the year to end-December dipped to R21,82 from R23,02 in 2008, hit by a stronger rand against the US dollar.

Headline earnings are the main profit gauge in South Africa and strip certain one-off, financial and non-trading items.

Kumba said it produced 41,9-million tonnes of the steel-making ingredient last year, up from the 36,7-million tonnes it produced in 2008.

Export sales increased 37% to 34,2-million tonnes.

“Kumba is committed to a further increase in production volumes during 2010, with the continued ramp up of the Jig plant,” the company said in a statement.

Kumba’s domestic sales would depend on the off-take from ArcelorMittal, while analysts expect Chinese demand for iron ore to grow by at least 5% this year, it said.

“Although global steel demand is expected to return to growth in 2010, this is likely to be moderate and the sustainability of increase in demand outside of China remains uncertain,” the company said.

Kumba said its operating profit remained highly sensitive to the rand/dollar exchange rate. The South African currency rose about 20% since the start of 2009.

The company declared a final dividend of R7,40 per share.—Reuters