Assore reports record earnings and dividend


Assore reports record earnings and dividend

Published Date: 2019-09-06 | Source: Stephen Gunnion | Author: Stephen Gunnion

Assore reports record earnings and dividend

The group has benefited from high iron ore prices and a weak rand but says geopolitical risks are weighing on global commodity markets.

Assore has reported record earnings for the third year running due to rising iron ore prices, higher sales of manganese ore and a weaker rand. But the mining holding company has warned that global growth is likely to slow in the year ahead due to geopolitical risks that are weighing on global commodity markets.

The mining holding company has interests in a number of joint ventures that produce manganese, iron and chrome ores. Iron ore, a key ingredient in steel, was supported by a 4.5% rise in world crude steel production over the year, while Chinese demand remained firm due to continued economic stimulus. The average price for iron ore price rose from $69 to $80 per ton over the year.

Despite strong steel production and demand in the US due to the tariffs levied on imported steel, Assore said the manganese alloy market remained oversupplied. This resulted in continued price weakness and poor profitability for ferroalloy producers, with pressure on non-integrated producers being exacerbated.

Assore's Dwarsrivier operation reported a decline in profit for the year due to lower prices for chrome ore and increased operating costs. It said this was compounded by a labour strike suffered by the mine in March, which accounted for a 4% decrease in production volumes.

Group headline earnings increased by 25% to a record high of R6.4 billion on the back of a 41% rise in headline earnings to R10 billion at iron ore and manganese business Assmang, which it owns a 50% stake in. The rest of the group's operations reported a 13% decline in headline earnings to R1.4 billion. Dwarsrivier contributed R516 million.

Attributable earnings were 16% higher at R5.9 billion, representing a third consecutive annual record. It's paying a final dividend of R14 per share, taking its total dividend for the year to R24. Last year it paid out R22.

Its shares closed 5.8% down at R300.

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