Commentary

Highlights

Kumba delivered an exceptional operational and sales performance in 2009 with substantial increases in mining, production and export sales volumes and strong cash flows driven by an increase in export revenues and tight cost management, notwithstanding the backdrop of global economic recession. Kumba’s revenue increased by 10% to R23.4 billion on the back of a 37% increase in export sales volumes driven by strong demand from China, though tempered by lower export volumes to Europe and Japan. Despite starting the year with concerns over the visibility and sustainability of export sales, the group increased revenue through higher export sales volumes which was mostly offset by the 40% reduction in benchmark iron ore export prices resulting in a 5% decrease in operating profit. Through focused cost management and a 16% increase in production, mainly from the Jig plant, the small increase in Sishen Mine’s unit cash cost on a like-for-like basis was well below inflationary cost escalations. Sishen Mine’s unit cash cost for 2009 was R98.83 (US$11.78) per tonne compared to R96.53 (US$11.70) per tonne at the end of 2008.

Attributable and headline earnings for the year were R21.88 per share and R21.82 per share respectively, on which a final cash dividend of R7.40 per share has been declared. The group’s strong cash flow generation has enabled the consistent payment of an interim and final dividend since listing on the JSE Limited in November 2006 aggregating to R43.90 per share.

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