Amplats shares plunge after update
• Full-year profits expected to slump as much as 77% because of the drop in the average price of a basket of platinum group metals
Anglo American Platinum (Amplats) expects its full-year profits to slump as much as 77%, due to the continuous drop in average platinum group metal (PGM) basket prices.
The trading update knocked its share price 7.3% to R717.13 in midmorning trade on the JSE and it closed 6.86% down on the day at R718.27.
The news rippled through the sector, with other PGM stocks falling between 4% and 5% on Thursday.
Amplats, which is majority owned by Anglo American, said on Thursday that its headline earnings per share were likely to be between R42.16 and R60.77 in the year ended December, versus R185.42 recorded in the same period a year earlier.
BASKET
The slump in profits was a result of the 35% drop in PGM basket prices on an annual basis, particularly palladium and rhodium, which fell 37% and 50%, respectively.
The PGM market has been under huge pressure for months since the Covid-induced boom and bust, followed by the war in Ukraine and the synchronised interest rates hiking cycle, which brought uncertainty about the world’s growth outlook.
China’s post-Covid recovery has been lacklustre relative to expectations, dampening prospects for a quick recovery in demand for PGMs, which are mainly used in the automotive sector to curb emissions in internal combustion engines.
The drop in metal prices coincided with persistent cost inflation across the industry, further squeezing profit margins.
In 2023, Sibanye-Stillwater and Impala Platinum announced potential job cuts to relieve pressure on the cost base.
However, Amplats has not announced job cuts, though it has said it is reviewing operations in the light of weaker commodity markets.
In a separate quarterly production update, Amplats said total PGM production slipped 6% to 932,200oz in the three months to end-December, year on year. For 2023 as a whole, total PGM production stood at 3.801-million ounces versus 402-million ounces a year ago.
PRODUCTION
Production from its own-managed mines slipped 3% to 543,500oz, mainly due to lower production at Amandelbult as a result of planned infrastructure closures and poor ground conditions at Dishaba Mine.
Total refined PGM production rose 30% to 1.366-million ounces during the review quarter versus the period a year ago.
Amplats expects to produce between 3.3-million ounces and 3.7-million ounces for 2024, subject to the effects of load curtailment, which is managed by power utility Eskom.
Unit cost guidance is forecast at R16,500-R17,500 per PGM ounce, in line with the guidance provided in December.
THE NEWS [ON THE UPDATE] RIPPLED THROUGH THE SECTOR WITH OTHER PGM STOCKS FALLING BETWEEN 4% AND 5% ON THURSDAY