Zimplats Revenue Falls 20% Amid Soft PGM Prices, Declares US$100 Million Dividend
Zimbabwe’s largest platinum group metals (PGMs) producer, Zimplats, has reported a significant 20% decrease in revenue for the financial year ending June 30, 2024, due to softening PGM prices, Mining Zimbabwe can report.
By Rudairo Mapuranga
According to Zimplats‘ ASX preliminary final report for the year ended June 30, 2024, despite the revenue drop, the company has announced a substantial US$100 million dividend.
The report states that for the fiscal year, Zimplats’ revenue fell to US$767.1 million, down from US$962.3 million in FY2023. The decline in revenue was attributed to lower average PGM prices during the period. Specifically, the gross revenue per 6E ounce sold, including the revaluation of open debtors, dropped to US$1,196 from US$1,595 the previous year.
Despite increased sales volumes, which rose by 6% to 641,000 6E ounces (up from 603,000 in FY2023), the financial metrics were adversely affected by the pricing environment.
According to the report, the cost of sales also saw a 5% increase, totalling US$684.7 million compared to US$651.9 million the year before. This rise was primarily due to higher production and sales volumes, as well as increased depreciation charges. However, cost containment measures helped moderate this increase.
Operating unit cash costs per 6E ounce decreased slightly by 1% to US$829, benefiting from cost control initiatives. Nonetheless, the gross profit margin contracted sharply to 11% from 32% in FY2023, influenced by lower revenue and increased foreign exchange losses, which soared to US$358 million from US$172 million. The depreciation of the Zimbabwean Dollar (ZWL) against the US Dollar contributed significantly to these losses, with the ZWL weakening from ZWL5,769 to ZWL33,904.
Profit before tax fell dramatically to US$37.6 million from US$286.8 million the previous year. The increase in income tax expense to US$29.4 million was mainly due to a rise in deferred tax expense following a corporate income tax rate change from 24.72% to 25.75%. Consequently, profit after tax dropped to US$8.2 million from US$205.5 million in FY2023.
Free cash flow generation was negatively impacted by lower PGM prices and higher capital expenditure. The company raised US$60 million in debt, resulting in a closing cash position of US$78.1 million, a sharp decrease from US$253.6 million in FY2023.
Despite the challenging financial year, Zimplats’ board of directors declared a final dividend of US$100 million, equating to 92.90 US cents per share. This dividend was paid on September 13, 2023, following the ex-dividend and record dates of September 1, 2023, and September 4, 2023, respectively.
For comparison, the board declared a final dividend of US$120 million (US$1.11 per share) for the year ended June 30, 2022, and an interim dividend of US$100 million (92.9 US cents per share) for the half-year ended December 31, 2022, which was paid on March 8, 2023.
Zimplats remains committed to rewarding its shareholders despite fluctuating market conditions, showcasing resilience amidst financial challenges.