BUSINESS MAVERICK: Why investing in high-flying Kumba may not be a good idea

Kumba Iron Ore has been good to its stakeholders. Generous in fact. For the six months to June 2019, the company reported an increase in headline earnings by 239% to R10.1-billion and declared an interim cash dividend of R9.9-billion or R30.79 per share. This represents a payout ratio of 98% of headline earnings, above its target range of 50% to 75% of headline earnings.

Kumba had to deal with unplanned maintenance at Sishen, which cut into production volumes. The company reported that total tonnes mined decreased marginally by 2% to 138Mt, while production volumes reduced by 11% to 201.1 Mt for the period under review. The company’s operational efficiency increased from 63% to 67%, which, together with its focus on cost optimisation, delivered savings of R460-million. This underpinned its earnings before interest, tax, depreciation and amortisation margin of 58% and its break-even price of US$32/tonne.

Whitburn says the lucrative iron ore price might prove to be Kumba’s Achilles heel. He says the current price serves as an incentive for newcomers to enter the fray and existing producers to invest in existing capacity. This could bring additional supply online. With most of the company’s cash being paid out to shareholders, concerns have been raised that investing in local capacity – which includes main mines Sishen and Kolomela – is not on the agenda.Anglo has been pumping cash into iron ore site Minas-Rio in Brazil. It has been reported that the price tag for buying and building it has reached $13-billion already, and the project is yet to come to a close.

DURITZ79 Hebbana...dis People they are on a mission....

Brasil Últimas Notícias, Brasil Manchetes

Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.

BUSINESS MAVERICK: Naspers’ Amsterdam listing elicits taxing questionsA kerfuffle has broken out among asset management companies about a scheme to avoid the immediate payment of capital gains tax in the process of Naspers’ listing in Amsterdam. Some say it’s tax avoidance rather than tax evasion. Others say it’s risky and opens shareholders to a tax challenge, so they are advising their clients to not do it. It shows Naspers shareholders face more than one tricky choice they should consider carefully.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

BUSINESS MAVERICK: Most South Africans can’t afford to retire, but there is a possible solutionChances are that when you reach retirement age you will have made too little provision to do so in comfort, or in some instances do so at all. It’s not just about a lack in savings culture – times are tough and every penny has been accounted for. But industry players say we can still turn this sinking ship around, and Retirement Benefits Counselling is where we should start.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

Business Maverick: Wednesday, July 24: Five Things You Need to Know to Start Your DayTrade talks between China and the U.S. are back on. And Beijing would like Washington to keep its mitts off of Hong Kong. Here are some of the things people in markets are talking about today.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

BUSINESS MAVERICK: Naspers’ extraordinary salariesExecutive pay is a contentious issue. What is fair and reasonable in a company with a market capitalisation of R1.5-trillion is not necessarily the same as in a company half the size. While the war for talent in the hi-tech space arguably drives salaries into the stratosphere, where is the limit? What cannot be argued is that after maintaining a stubborn indifference to shareholder concern, Naspers is doing its best to coax shareholders to its point of view. sashaplanting Why not? These okes are money magnets
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

Business Maverick: Goldman Sachs Says Yen Offers a More Attractive Hedge Than GoldInvestors looking at haven assets to protect against a risk-off shock should find the yen a cheaper option than gold, according to Goldman Sachs Group Inc.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »