Kumba results lift stock 6% but five-year losses leave investors 43% in the red

Kumba Iron Ore’s share price collapse has wiped out nearly half of investors’ money over the past five years as it reported flat headline earnings per share on Tuesday.

A R10, 000 investment in 2020 would now be worth just R5, 387 – unless you sold at its 2021 peak, where the profit would have been roughly the same as selling today. This is thanks to a 44% climb in stock over the past year, while the five-year view shows a decline of 43%.

Despite the increase in value, it’s a far cry from the JSE’s All Share figures, which has shown a return of 74% over the same five-year period.

Kumba’s figures, however, are purely based on share price movements and do not include dividends, such as the interim cash dividend of R16.60 declared on Tuesday morning as the miner published its interim results for the period to June.

Although this payment, out of attributable free cash flow of R7.9 billion, comes to a payout for shareholders in total of R5.3 billion, it is lower than last year’s R18.77 paid out per share.

The iron ore miner’s share price started falling from around last January.

Kumba, which owns both Sishen and Kolomela mines, is one of the operations Anglo American said last May that would continue to form part of the group.

This followed BHP Billiton’s unsolicited $38.9 billion (R696.40bn) unsolicited bid for Anglo American – which the London-based miner rejected as being too cheap, followed by a further two rejections to form a juggernaut.

The good news is that its stock is up 5.83% as of Tuesday lunch time on the back of the results.

In presenting the results, CE Mpumi Zikalala said the miner had made strides in its strategy of “safely and sustainably unlocking value from our core assets, demonstrated by our consistent production, cost and capital discipline”.

“Improved operational performance with increased sales and consistent production ensures that we are well on our way to achieving our full year 2025 guidance,” she said.

However, headline earnings – a key metric of performance measured by analysts – flat against June last year, its results show.

Over five years, the stock is down 46.13% - which translates into a R10 000 investment in 2020 now only being worth R5 387.

IOL