Kumba tumbles as it withholds dividend
The producer blames volatile markets and exchange rates, and is unlikely to resume payments until 2018
Kumba Iron Ore surprised some investors in the market and sent its share price tumbling by withholding its 2016 full-year dividend, citing volatile markets and exchange rates as well as the exit of parent Anglo American as the reasons for holding onto its rapidly growing cash pile. Kumba, SA’s largest iron-ore producer, is 69.7% owned by Anglo American — which has said it wants to dispose of its interest in the company. Kumba reported a R10bn turnaround in its balance sheet to a net cash position of R6.2bn by the end of December from net debt of R4.6bn a year earlier and net debt of R7.9bn in 2014. By the end of January, Kumba’s net cash had ballooned to R8.2bn. The strong cash generation by Kumba followed higher received iron-ore prices, which increased 21% to $64 per tonne in 2016. It also instituted a cost-cutting programme and restructuring that shed 2,500 jobs at its flagship Sishen mine. This led many in the market to anticipate a dividend payment after the company withheld a ...
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