Amplats forecasts big rise in profits |
Boost from rising commodity prices, performance improvement and wise strategic moves
ANGLO AMERICAN Platinum (Amplats) said yesterday that it expected a huge lift in its profits for the year to end December, despite faltering platinum prices. The group said its headline earnings per share (heps) would be almost double last year’s figures as a result of improved platinum group metal prices and operations.
It said full-year headline earnings per share would be between 83 and 103 percent higher, at between 2 715 cents and 3 010c per share from 1 482c the previous year, as the group benefited from a combination of a boost from rising commodity prices, an improvement in performance and wise strategic decisions taken a few years earlier.
The miner said a 13 percent rise in a basket of platinum-group metals, rhodium and palladium used in emissions-reducing technology, has lifted performance over the period, with the company also citing a R500m re-evaluation of an asset as well as cost-containment playing into its favour.
The price of palladium has almost tripled over the past three years, including a 42 percent gain since August. Rhodium, another by-product of platinum mining used in cars and the chemical sector, has climbed fourfold since July 2016.
On Monday, Impala Platinum said it returned to profitability in the six months to end December as a result of improved prices in palladium and rhodium prices, sending its stock to a 14-month high.
Amplats said basic earnings for the period would include post-tax attributable net losses of R1.5 billion, including the impairment of the company’s associate investment in the Bafokeng Rasimone Platinum Mine joint venture with Royal Bafokeng Platinum and the loss on disposal of Union mine and Masa Chrome.
Amplats, which will publish its results on February 18, had previously forecast heps for the period to rise at least 20 percent.
It said headline earnings in the period would include a post-tax attributable net gain of R0.5bn, which included the remeasurement of deferred consideration relating to the Rustenburg disposal.
Noah Capital markets analyst Rene Hochreiter said Amplats’s expectations were “an enormous uplift to what analysts were looking at “which was a consensus of 153c earnings a share for 2019, which the group has already surpassed with earnings of 292c a share in the first half of the financial year.
“It is crazy, these guys could shoot the lights out! Look at what they have done in the first half of the year, they could double the earnings. Compare that to Implats – the market was expecting earnings of up to R8 a share, but they only got 50c. The share price was down 10 percent just yesterday,” he said.
Hochreiter placed Implats’s high performance on superb management of the lease area in Rustenburg, particularly with regard to production and safety.
Amplats shares rose 0.24 percent on the JSE yesterday to close at R629.