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UPDATE 1-South Africa's Kumba says resuming dividend is 2017 priority
February 14, 2017 / 1:42 PM / 9 months ago

UPDATE 1-South Africa's Kumba says resuming dividend is 2017 priority

(Adds CEO comment, shares)

JOHANNESBURG, Feb 14 (Reuters) - South Africa’s Kumba Iron Ore Ltd has made resuming dividend payouts a priority for 2017 after higher metal prices helped the Anglo American unit boost profit more than two-fold last year.

Africa’s biggest producer of iron ore, used in steel-making, is one of the assets Anglo is considering jettisoning as part of a sweeping overhaul.

Kumba suspended dividends in mid-2015 after the price of iron ore fell to its lowest level in a decade.

But a recovery in the metal price, which topped $90 a tonne for the first time since 2014 this week, has lifted Kumba and raised the prospect of a dividend payout in 2017.

“Reinstating the dividend is a priority in 2017,” Chief Executive Themba Mkhwanazi said at a results presentation.

But Kumba said no dividend would be paid for 2016 in the face of price volatility and the Anglo portfolio review, despite an impressive turnaround on its balance sheet from a net debt last year of 4.6 billion rand ($350 million) to a cash balance of 6.2 billion rand.

“We would need stability around the iron ore prices,” Mkhwanazi told Reuters when asked what was needed to reinstate the dividend.

Kumba, 70 percent-owned by Anglo, reported a 131 percent jump in headline earnings per share in the year to the end of December but disappointed investors who had been expecting a strong performance to lead to dividend payouts.

Its share price was down 6 percent to 212.05 rand.

The company’s performance last year was boosted by higher prices and restructuring which included lay-offs and reducing the amount of waste mined.

$1 = 13.1076 rand Reporting by Ed Stoddard; Editing by Tiisetso Motsoeneng and Adrian Croft

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