South Africa: Paydirt - Another Anglo Unit Reports Huge Earnings Boost

analysis

Christmas has come early for Anglo American shareholders. The day after Anglo American Platinum unveiled surging profits and a mega dividend, another Anglo unit, Kumba Iron Ore, has paid out 92% of its headline earnings to shareholders.

Kumba Iron Ore is the latest Anglo American unit to report stellar results on the back of rising prices for the commodity it produces. On Tuesday the company reported that 2019 headline earnings had surged to R16.3-billion from R9.7-billion the year before, an increase of about 68%. Around R15-billion of that will flow to shareholders as dividends, 92% of headline earnings. Empowerment partners got R4.7-billion. In the Anglo stable, money almost seems to be sprouting from trees these days.

Kumba mines iron ore, the key ingredient for steel. Its profits were mostly lifted by higher prices. The company said the average realised iron ore export price that it received for its product increased 35% to $97/tonne, while the average rand exchange rate softened 9% compared to 2018. That is a double-whammy for commodity producers based in South Africa whose product is priced - as are virtually all commodities - in greenbacks.

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