Kumba warns profit will plunge by more than a third

Kumba Iron Ore expects headline profit to drop by as much as 44% in the year ended December as the result of lower iron ore prices and lower sales, though its shares rallied after an initial jolt.

In a trading update on Thursday, Kumba, which is majority owned by Anglo American, said headline earnings per share would be between R58.29 and R64.49, representing a decline of 38%-44% year on year.

The shares price dropped as much as 3% after the announcement before rebounding to close more than 4% higher on the day.

The sanguine market reaction suggests the news was already discounted by investors, given that Kumba’s fortunes are tied to the global iron ore market, which relies heavily on supply-demand dynamics in China.