Kumba Profit to Decline at Least 20% on Lower Iron-Ore PricesAna Monteiro
Kumba Iron Ore Ltd., which owns Africa’s largest mine for the steelmaking ingredient, said full-year profit will drop at least 20 percent after prices declined.
Both headline and basic earnings will be at least 3.09 billion rand ($277 million) lower in the year ended Dec. 31 from 12 months earlier, the Pretoria-based unit of Anglo American Plc said in a statement today.
“The decrease in earnings is largely attributable to a significant decrease in export iron-ore prices, partially offset by a weaker exchange rate during the period,” it said.
Iron ore tumbled 42 percent this year after companies including Rio Tinto Group and Vale SA raised low-cost output in Australia and Brazil, spurring a global glut just as economic growth in China slowed. The market is in the midst of a transition without precedent in recent commodity history as supply jumps and higher-cost mines shut, according to Macquarie Group Ltd.
While Kumba sells iron ore in dollars, its costs are mostly denominated in rand. The currency has depreciated 5.8 percent against the greenback this year.
Kumba reported headline earnings, which exclude one-time items, of 15.4 billion rand, or 48.08 a share, for 2013. The company will release its results on Feb. 10.
The stock fell 1.3 percent to 277.65 rand at 10:27 a.m. in Johannesburg, extending the drop this year to 37 percent.