Anglo Platinum’s Half-Year Earnings Plunge Amid Market Challenges
Anglo American Platinum (Amplats) has announced that its earnings for the first half of this year are expected to be significantly lower than in the same period last year. The company forecasts a decrease in headline earnings and headline earnings per share (HEPS) of between 65% and 75%. This means that headline earnings are likely to be between R6.7 billion ($519 million) and R9.4 billion ($728 million), compared to R26.7 billion ($2.1 billion) in the first half of 2016, the company told Johannesburg Stock Exchange News Service (SENS) on Monday.
HEPS are expected to decrease to between 2,544c and 3,569c per share, compared to 10,140c in the first six months of last year. Basic earnings per share are likely to decrease by a similar percentage to headline earnings, with an estimate of between R6.6 billion and R9.3 billion, compared to R26.7 billion in the corresponding period of last year. Earnings per share are expected to be between 2,506c and 3,531c per share, compared to 10,125c in the first half of last year.
The decrease in earnings is primarily due to a decline in revenue caused by lower prices for platinum group metals (PGMs). This was mainly driven by declines in the dollar prices of rhodium and palladium, which were down 47% and 29% respectively. The weakening of the rand/dollar exchange rate partially offset the impact of the lower dollar price, resulting in a 15% decrease in the overall rand basket price compared to the same period last year.
Lower sales volumes from own production also contributed to the decrease in earnings. Sales volumes, excluding trading, were 12% lower due to reduced refined production and the impact of maintenance and asset integrity work. Additionally, load-curtailment by Eskom, South Africa’s state-owned power utility, resulted in a deferred production of 66,400 ounces of PGMs.
Higher mining and processing costs, driven by inflationary pressure and exchange rate volatility, further affected earnings. While costs incurred in purchasing concentrate decreased due to lower prices and volumes.
Amplats will release its financial results for the six months ended June 30 on Monday, July 24.
Amplats mines 40% of the world’s platinum group metals at the Mogalakwena, Amandelbult, Mototolo and Unki mines in Shurugwi.