A R6-billion impairment at South Africa’s largest iron-ore producer‚ Kumba Iron Ore (KIO)‚ has torn a hole in the Anglo American subsidiary’s annual profit.The sharp drop in global prices for iron-ore was to blame. News of the battered financial position of the once star performer in the Anglo stable follows hard on a bleak forecast from Anglo American Platinum (Amplats).
The news flow around Anglo yesterday included a report in Brazil’s O’Globo newspaper that the diversified mining company was planning a complete exit from its assets in that country.
Kumba said last week it was cutting about 4000 jobs at its flagship Sishen mine as it changed its mining plans to mine more cheaply in a low-price environment.
It said yesterday its basic earnings for the past year would fall up to 96%‚ to between R440-million and R487-million‚ from R10.7-billion the previous year.
Headline earnings‚ which strip out exceptional items such as impairments‚ would fall up to 67%‚ to between R3.67-billion and R3.86-billion‚ from R11-billion before.
“The recent announcement regarding cost-cutting measures including reduced stripping quantities‚ could boost earnings significantly.
“Unless management has surprises in store for us when results are announced‚ this is unlikely to facilitate dividends‚” Steve Meintjes‚ an analyst with Momentum SP Reid said.
Amplats‚ which is 80%-owned by Anglo American‚ said it would report a basic loss for the year to end-December of between R12.1-billion and R12.2-billion‚ compared with earnings of R624-million in 2014‚ with R14-billion of write-downs and R850-million in restructuring costs ravaging the firm’s financial performance.
Headline earnings‚ which give investors a like-for-like basis to judge the company by excluding once-off items‚ were forecast at between R60-million and R135-million‚ as much as 92% below last year’s R786-million. Anglo said in December it would sell its phosphates and niobium businesses in Brazil and analysts put a $1-billion (R16.1-billion) price tag on the disposal.
The O’Globo report speculated that Anglo also wanted to sell its newly commissioned MinasRio iron-ore mine and its Barro Alto nickel mines and furnaces‚ which were refurbished last year.
In its December briefing to the market‚ Anglo CEO Mark Cutifani said the companywould reduce the number of its mines to between 20 and 25 – down from 55.
This would result in cutting 85000 jobs to focus on its best assets in industrial metals including platinum‚ diamonds and bulk commodities.
Anglo wanted to raise $4-billion (R64-billion) towards repaying debt by selling assets.
It expected to have net debt of between $13.5-billion (R218-billion) and $14-billion (R226-billion) at the end of December last year.
Its shares fell by about 75% last year‚ as prices for the commodities it produces fell heavily across the board.
Asked about the veracity of the O’Globo report‚ Anglo spokesman Pranill Ramchander said there had been “a lot of speculation about our plans for various of our assets around the world‚ following the announcement we made in December about our future portfolio plans”.
Anglo would give the market detailed plans about its portfolio in mid-February‚ Ramchander said. Barclays analysts yesterday pointed out that Barro Alto had been identified in June as one of the core assets.
“Indeed‚ we imagine the company may well consider bids for a stake in any of its assets‚ as we suspect the company is probably listening to shareholders who have publicly recommended the company avoid issuing equity‚” the Barclays analysts said. — BDLive
Kumba profits hit by R6bn impairment
The sharp drop in global prices for iron-ore was to blame. News of the battered financial position of the once star performer in the Anglo stable follows hard on a bleak forecast from Anglo American Platinum (Amplats).
The news flow around Anglo yesterday included a report in Brazil’s O’Globo newspaper that the diversified mining company was planning a complete exit from its assets in that country.
Kumba said last week it was cutting about 4000 jobs at its flagship Sishen mine as it changed its mining plans to mine more cheaply in a low-price environment.
It said yesterday its basic earnings for the past year would fall up to 96%‚ to between R440-million and R487-million‚ from R10.7-billion the previous year.
Headline earnings‚ which strip out exceptional items such as impairments‚ would fall up to 67%‚ to between R3.67-billion and R3.86-billion‚ from R11-billion before.
“The recent announcement regarding cost-cutting measures including reduced stripping quantities‚ could boost earnings significantly.
“Unless management has surprises in store for us when results are announced‚ this is unlikely to facilitate dividends‚” Steve Meintjes‚ an analyst with Momentum SP Reid said.
Amplats‚ which is 80%-owned by Anglo American‚ said it would report a basic loss for the year to end-December of between R12.1-billion and R12.2-billion‚ compared with earnings of R624-million in 2014‚ with R14-billion of write-downs and R850-million in restructuring costs ravaging the firm’s financial performance.
Headline earnings‚ which give investors a like-for-like basis to judge the company by excluding once-off items‚ were forecast at between R60-million and R135-million‚ as much as 92% below last year’s R786-million. Anglo said in December it would sell its phosphates and niobium businesses in Brazil and analysts put a $1-billion (R16.1-billion) price tag on the disposal.
The O’Globo report speculated that Anglo also wanted to sell its newly commissioned MinasRio iron-ore mine and its Barro Alto nickel mines and furnaces‚ which were refurbished last year.
In its December briefing to the market‚ Anglo CEO Mark Cutifani said the companywould reduce the number of its mines to between 20 and 25 – down from 55.
This would result in cutting 85000 jobs to focus on its best assets in industrial metals including platinum‚ diamonds and bulk commodities.
Anglo wanted to raise $4-billion (R64-billion) towards repaying debt by selling assets.
It expected to have net debt of between $13.5-billion (R218-billion) and $14-billion (R226-billion) at the end of December last year.
Its shares fell by about 75% last year‚ as prices for the commodities it produces fell heavily across the board.
Asked about the veracity of the O’Globo report‚ Anglo spokesman Pranill Ramchander said there had been “a lot of speculation about our plans for various of our assets around the world‚ following the announcement we made in December about our future portfolio plans”.
Anglo would give the market detailed plans about its portfolio in mid-February‚ Ramchander said. Barclays analysts yesterday pointed out that Barro Alto had been identified in June as one of the core assets.
“Indeed‚ we imagine the company may well consider bids for a stake in any of its assets‚ as we suspect the company is probably listening to shareholders who have publicly recommended the company avoid issuing equity‚” the Barclays analysts said. — BDLive
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