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Revenue and profits fall at Kenmare, but dividends increase

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Michael Carvill, managing director of Kenmare Resources (Photo: Steve Humphries)

Michael Carvill, managing director of Kenmare Resources (Photo: Steve Humphries)

Michael Carvill, managing director of Kenmare Resources (Photo: Steve Humphries)

Kenmare Resources has reported a fall in revenue and profits last year, nonetheless, the company has increased its final dividend for the year by 22pc.

Revenues of $243.7m at Kenmare in 2020 were down 10pc on 2019 due to reduced volumes, partially offset by increased average prices.

During the year Kenmare relocated its Wet Concentrator Plant B (WCB P), in what was one of the largest moves of a single piece of equipment in the world.

The Mozambique-focused group reported earnings of $76.7m, down 17pc year-on-year due to lower revenues, according to annual results.

Profit after tax of $16.7m fell 63pc due to lower earnings, increased depreciation charges and finance costs.

Production of ilmenite, which is used in a number of consumer goods including paints, fabrics, paper, and cosmetics, decreased 15pc to 756,000 tonnes, due to lower heavy minerals consumption, and lower ilmenite recoveries.

Total shipments of finished products of 853,100 tonnes, was down 17pc, due to lower production volumes, poor sea conditions, and works to upgrade transhipment capacity.

Prices for the commodities Kenmare produce “have remained strong,” despite the significant and materially negative, impact of Covid-19 on global growth, the company said.

Overall, demand for ilmenite, its primary product, remains “robust” on the back of strong demand for home DIY work.

The market for ilmenite was expected to soften in the second half of 2020 due to impacts of Covid-19, but Chinese demand remained strong and end markets recovered more quickly than expected, according to the company.

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Prices were marginally softer in the third quarter of the year but resumed an upward trend in the last three months of 2020, Kenmare said.

The company’s net debt position of $64m at year-end 2020, compared to $13.7m net cash at the end of 2019, is primarily due to investment in development projects.

Michael Carvill, managing director of Kenmare Resources, said: “Global demand for ilmenite, our primary product, has remained strong and prices rose through 2020.”

“We are already seeing the benefits of higher production volumes following the move of WCP B, driving lower unit costs in a rising commodity price environment. In recognition of this, the board is recommending a 22pc increase in dividends for 2020 with a final dividend of USc7.69 per share.”

The company is also increasing its target dividend payment from “a minimum of 20pc profit after tax to 25pc for 2021,” Mr Carvill added.

The company said the number of people in isolation due to Covid-19 has reduced from 177, reported on 10 March, to 112 on 22 March. It added that testing of the workforce is now being completed weekly.

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