Kumba final results December 2018
Revenue for the year decreased to R45.725 billion (2017: R46.379 billion), operating profit lowered to R16.360 billion (2017: R21.390 billion), profit for the year attributable to owners of Kumba fell to R9.615 billion (2017: R12.335 billion), while headline earnings per share weakened to 3 028 cents per share (2017: 3 047 cents per share).
The Board has declared a final cash dividend of R15.73 per share, which together with the interim dividend of R14.51 per share, results in a total dividend for the year of R30.24 per share (2017: R30.97). This equates to 100% of headline earnings for 2018, as the interim dividend included a once-off top-up cash dividend of R7.53 per share to reset the balance sheet net cash position.
Company outlook for 2019
Full year production guidance is between 43 Mt and 44 Mt with Sishen producing around 30 Mt of product and mining between 170 Mt and 180 Mt of waste. Sishen's stripping ratio in 2019 is expected to exceed 4.5, with the average LoM stripping ratio reducing to approximately 3.4. Kolomela's production guidance is between 13 Mt and 14 Mt and waste at 55 Mt to 60 Mt. The stripping ratio for the mine is expected to exceed 4 in 2019, with the LoM average at approximately 4.
Total sales volumes are likely to be between 43 Mt and 44 Mt, including domestic sales volumes of around 3 Mt of the 6.25 Mt contracted to ArcelorMittal SA in terms of the supply agreement. Delivery of production and sales volumes as guided will be in line with rail performance and finished stock levels. We continue to engage with Transnet to optimise efficiencies and ensure that we achieve maximum rail capacity.
Unit costs are expected to be between R315/tonne and R325/tonne for Sishen and between R265/tonne and R275/tonne for Kolomela. Costs will remain under pressure as a result of increases in fuel, labour and maintenance costs, with partial offset from our cost savings programme, targeting R700 million in 2019.
The 2019 outlook for capital expenditure, including deferred stripping, is expected to be in the range of R4.6 billion to R4.8 billion. Beyond 2019, it is anticipated that expansion capital will include amongst others, our UHDMS technology, currently in feasibility phase. Construction expected to start in 2020 and capital expenditure for the UHDMS project is expected to be between R2 billion and R3 billion. Further information will be available once the feasibility study is completed towards the end of 2019.
Iron ore export prices and the Rand/USD exchange rate are key factors influencing Kumba's financial and operational performance. Shareholders are advised that these forecasts have not been reviewed or reported on by our auditors.
Themba Mkhwanazi concluded, "We are continuing to make good progress on transforming Kumba into a company that delivers sustainable returns through the cycle, underpinned by the economic benefit offered by our differentiated product quality.
We are delivering our strategy to maximise the potential of our world class asset base by leveraging our existing capabilities whilst embracing new technologies to produce safely and efficiently. Importantly, at the half year, we put in place the new dividend policy that targets a pay-out of 50 to 75% of headline earnings. The dividend policy has been well received and it places greater transparency around our commitment to disciplined capital allocation and ongoing shareholder returns."
The presentation of the Company's results for the year ended 31 December 2018 will be available on the Company's website http://www.angloamericankumba.com at 07:05 CAT and the webcast will be available from 11:00 CAT on 19 February 2019.