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Cape Town – Anglo American Platinum (Amplats) expects headline earnings and headline earnings per share for the six months to the end of June to be as much as 67% lower than the previous year.
The company’s share price dipped by 4.7% to R303.20 on the news.
Amplats said in a statement that its headline earnings could be between 67% and 43% lower than the previous year.
This means headline earnings for the period is likely to be between R550m and R875m lower than the prior year restated figure of R1.65bn. Headline earnings per share is expected to decrease between 210 cents and 335 cents.
Amplats further foresees that basic earnings will be between 169% and 189% lower, representing a loss of R1.06bn and R1.3bn than the previous year. Earnings per share is likely to represent a loss of between 405 cents and 520 cents.
It attributes the decrease in headline earnings to post-tax impairments to the value of R2.2bn.
“The impairments that impacted basic and headline earnings include the write down of a term loan to Atlatsa and a loan to the Bakgatla Ba-Kgafela Community related to their interest in Union."
In addition, expected headline and basic earnings are lower due to a significant strengthening of the rand in the first half of 2017 compared to the previous year, as well as lower sales volumes, which were impacted by refined production.
Amplats’ refined production was down due to a run-out at its Waterval Furnace Number 1 smelter in the third quarter of 2016, which was subsequently rebuilt in the fourth quarter. Furnace Number 2 underwent a planned rebuild in the first quarter of this year.
The run-outs at the smelters resulted in a backlog in Amplats’ processing pipeline material of 65 000 platinum, which the miner is expected to make up during the second half of this year.
According to data released by Statistics South Africa on July 13, mining production contracted for two consecutive months - -0.2% in April and -1.4% in March.
Chamber of Mines chief economist Henk Langenhoven said in a statement after the release of the data that the contraction was due to a combination of the uncertainty regarding commodity prices and the strengthening of the rand/dollar exchange rate.
“The rand was, on average, nearly 17% stronger against the dollar during the first six months of 2017, compared to last year. It has strengthened by over 5% since January 2017.”
Langenhoven said the rand commodity price index declined by 12% since January. During this period, platinum prices dropped by 9%.
Amplats will announce the official results for the half year to 30 June 2017 on Monday July 24.
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