JOHANNESBURG – Kumba Iron Ore, which Anglo American has put up for sale, said on Wednesday its profit more than doubled for the year, setting it up to outstrip forecasts when it reports earnings next month.
Africa’s biggest miner of iron ore, which is used in steel-making, is one of the assets Anglo is jettisoning as part of a sweeping overhaul to cope with a rout in commodity prices.
Anglo owns 70% of Kumba, which a year ago cut output and jobs to cope with weaker iron ore prices at the time.
Kumba said headline earnings per share (EPS) for the year to end-December would likely be in a range of R26.36 to R27.72, between 123% and 125% higher on a year ago basis, when it reports on February 14.
Kumba’s forecast is well above a R22.32 estimate in a poll of 14 analysts by Reuters and its shares, which have surged nearly 20% so far this year, climbed 7.18% to R187.57, a level last seen five weeks ago.
It said the results were boosted by a weaker rand currency and higher iron ore prices.
Unlike oil, gold and copper, whose benchmark pricing is set in London and New York, iron ore is one of the few commodities whose global pricing takes its cue from China.
Iron Ore futures prices have gained more than 10% so far this month to build on last year’s rally, largely spurred by China’s efforts to tackle a chronic glut in its steel sector.