Kumba axes dividend on 61% first-half profit drop

Johannesburg - Kumba Iron Ore [JSE:KIO] , Africa’s largest producer of the steelmaking ingredient, cut its interim dividend for the first time since it started trading in 2006 as profit declined 61% after prices plummeted.

Earnings excluding one-time items for the six months ended June 30 fell to R2.5bn or R7.85 a share from R6.51bn , or R20.28/share, from the same period last year, the Pretoria-based unit of Anglo American [JSE:AGL] said in a statement on Tuesday.

Iron-ore prices dropped 38% in the first half due to a surplus that emerged after the largest miners, including Rio Tinto Group , BHP Billiton [JSE:BIL] and Vale SA fuelled a supply glut by investing billions of dollars to boost output and as China’s economy grew at the slowest pace in more than two decades.

Iron-ore prices “are expected to remain under pressure as Australian and Brazilian producers increase supply, and demand growth from China slows”, it said.