Impala Platinum (Implats) shares dropped by almost 8% yesterday after the miner reported a 2.1% drop in half-year profit due to power cuts and a furnace rebuild, which negatively impacted the production of platinum group metal. (PGM).
The shares slid to an intra-day low of R159.39 They have fallen by 40.99% in the past year.
In its results for the six months ended December 31, 2022 the group said basic and headline earnings increased by 1% both to R14 billion. Basic and headline earnings per share of 1 648 cents per share and 1 654 cents per share were 3% and 2% lower, respectively.
It declared an interim dividend of R4.20 per share amounting to R3.6bn, a 20% decrease from last year’s R5.25bn.
Implats reported a 4% increase in revenue to R57.8bn, while net profit increased by 3.1% to R14.8bn.
Implats CEO Nico Muller said: “The group’s financial performance was supported by a robust rand, PGM pricing and destocking refined metal inventory to offset the impact of lower refined volumes, but was hampered by broad-based inflationary pressures and a marked rand depreciation.”
Looking ahead, Muller said the operational focus for the remainder of the 2023 financial year was on ensuring stability at its South African mining and processing assets during an expected period of inflationary pressure, persistent load shedding, and recommissioning of its refurbished Number 4 smelter in Rustenburg in the fourth quarter of the 2023 financial year.
However, Implats warned that project activity and capital spending were set to increase in the second half of its 2023 financial year.
In the reporting period, the miner’s refined output declined 9% to 1.476 million ounces from 1.617 million ounces in the same period last year.
Smelting capacity was constrained by increased (electricity) load curtailment and the scheduled rebuild of the Number 4 furnace in Rustenburg, which started in late November, 2022.
It delivered sustained production momentum and saw strong demand for its primary products in the reported period, amid a robust rand PGM pricing environment, mitigating the financial impact of broad-based inflationary pressures, it said.
The benefits of a geographically diverse production footprint and initial contributions from its suite of growth projects countered the challenging operating environment, typified by high inflation and intensified utility-level power constraints in South Africa, it said.
Implats said the global macroeconomic backdrop was generally expected to become more benign in 2023.
“PGM markets are expected to tighten during 2023, as auto production progressively recovers from recent supply chain constraints, China moves away from its zero-Covid policy, and industrial demand remains resilient.
“The risk to primary global supply has been elevated by the escalation in load curtailment in South Africa and logistical and supply chain constraints in Russia. Secondary supply should deliver modest growth, but remains vulnerable to rising funding and freight costs, constrained processing capacity, and weak auto sales in developed markets,” it said.
Muller said Implats was committed to rigorous stakeholder engagement as they navigated the changeable socio-economic environment in South Africa and Zimbabwe, and pursued the proposed acquisition of a majority stake in Royal Bafokeng Platinum.
BUSINESS REPORT