Research archive for KIO

Kumba Iron Ore reported six month numbers to June, one of the first majors in the Anglo stable out with results. And they are nothing short of amazing results. Headline earnings of 9.1 billion ZAR for the first half, on revenue of 24 billion ZAR. And for the record, Kumba paid 5.135 billion ZAR worth of tax. Wow. This company does not sit in the category of companies that need to recover to pre 2008 levels as the minister of finance says. 28.2 ZAR worth of basic earnings per share. And because the company's biggest shareholder is Anglo American (just over 65 percent), expect the parent company to suck out all the free cash. I guess similar examples are Barclays/ABSA and Vodacom/Vodafone. The dividend is 21.7 ZAR per share, the trailing dividend is then over 42 ZAR a share, which as Byron pointed out in their trading update is around an 8 percent yield. Amazing.

We had a trading update from Kumba Iron Ore for the 6 months ended 30 June 2011 this morning. Headline earnings per share look to be around R26.80 compared to R20.28 for the 6 month period in 2010. The increase is attributable to higher iron ore prices which was slightly offset by the strengthening of the rand.

Kumba Iron Ore with another whopping set of results this morning with headline earnings up 106% to a staggering R14.3bn. This huge increase has much to do with a 92% weighted average surge in export iron ore prices and a 6% increase in export sales due to more efficient operations. So clearly benefitting from the huge demand coming out of China. Headline earnings per share for the year were R44.67 with a whopping R21 a share dividend declared. At a share price of R463 the stock looks cheap especially with demand from the east not showing any signs of easing in the near or long term future.

The Kumba Iron Ore and DMR saga continues and will go the distance in the courts. The feeling here is that the government wants to make sure that some connected parties make money out of this deal. And by that I mean the benefactors of Imperial Crown Trading. It is too ugly to even think that everyone would just shrug their shoulders. Seems like one of the best gains in the short term in South African history and basically the value swap at the expense of public shareholders. Why no heads rolled at Arcelor Mittal in a more timeous fashion is beyond me.

Kumba Iron Ore and the Department of Mineral Resources at it again. This time I guess it is serious. Every time it is serious, but this one is most concerning for shareholders. And I must be honest, I think that it is going to go all the way to the courts. And that friends, will be the litmus test of how favourable it is for hard earned shareholder funds to be put to work in South Africa. Which then has the consequences for everyone.

Kumba Iron ore. Two things to discuss here this morning, the good and the bad, which could lead to ugly. First a trading statement from them, for the full year: "Shareholders are advised that earnings and headline earnings are likely to be between R14,000 million and R14,400 million, with headline earnings per share ("HEPS") and earnings per share ("EPS") being between R43.65 and R44.90." Nice, that puts the stock on a ten times historic multiple at the top end of the range.

By far and away the biggest news (I think) was a government press release, and only the second half really. And it had to do with this Statement on Cabinet meeting of 24 November 2010. So what I hear you say, hold on a second, this piece, which itself would you believe was highlighted and published in bold itself. Here goes:

I am sure that most of you out there would agree with all of this, but this is preaching to the business converted. I had a stronger view from a present employee of a major platinum mining company about the present landscape. He is on the battleground and this I guess is more real and personal and as such a much more emotive issue for him. Let us call him S, his first initial. This is what he had to say:

Kumba Iron Ore came out with that aforementioned trading statement on Friday. Check it out, from the SENS release:

Let us get back to the Sishen Iron Ore company, because this is starting to hot up. A refresher, the Sishen Iron Ore company is managed by Kumba Iron Ore. In fact the domain http://www.sishenironorecompany.co.za/ resolves to the Kumba Iron Ore website, so that tells you a lot. But remember that the mining rights were not renewed by Arcelor Mittal, they forgot. Or were hoping that Kumba would look out for them, or remind them. It does not happen that way. Kumba pounced post the Arcelor Mittal rights having not been renewed, but the DME had different idea's, as the Business Day points out: Kumba (now) sues state over BEE rights.

What do you make of the Kumba Iron Ore statement yesterday? In my mind it is a threat, pay up they are saying to Arcelor Mittal, or ship out. There is a sentence that makes it absolutely clear what they think of the steel makers response That statement is incorrect. And the last line of the announcement is telling On the contrary, SIOC has advised ArcelorMittal that should the parties not come to a firm agreement on an interim pricing mechanism in the near future, SIOC will review the basis upon which it will continue to supply iron ore to ArcelorMittal. Pay up or iron ore supply could be diverted. Simple. Ball back in your court.

Kumba Iron Ore also with a massive trading quarter. My jaw dropped when I read it. Kumba Iron Ore makes some telling points in their trading update 23% increase in total production year-on-year, to 11.5Mt (million metric tonnes), as production from the Jig plant continues to ramp up, increasing by 7% from the fourth quarter of 2009 to 3.3Mt, and reaching levels above nameplate capacity during the quarter. So when the company said that they were looking at 50 million tons for the year next year, you could have been forgiven for thinking that it was a far away target. This proves that it is not the case.

More on the Kumba Iron Ore debacle. The third party holding the mineral rights has been revealed to be empowerment company Imperial Crown Trading. The company, established in September 2008, has a Monica Ripepi, Mabelindile Archibald Luhlabo and Prudence Zerah Mtshali listed as directors. Interestingly, Mtshali has been romantically linked to deputy president Kgalema Motlanthe. Hmm, sounds fishy!

Kumba Iron Ore released an announcement after Arcelor Mittal had said their stock would start trading again. You don't have to read it too carefully, but there are some good points in here: