Anglo American Platinum (Amplats) yesterday forecast a decrease in headline earnings per share and earnings driven by a 20 percent decrease in sales volumes, but backed its 2022 production guidance.
In its trading statement for the six months ending June 30, 2022, ahead of its group’s interim results to be released next week, the world’s biggest platinum producer said headline earnings per share, and basic earnings for the period were likely to decrease by between 40 percent and 50 percent compared to the previous year.
“Headline earnings and basic earnings are likely to be between R23 billion and R28 billion and headline earnings per share and earnings per share will decrease to between 8745 cents and 10 646 cents per share,” the group said.
The expected decrease in headline earnings and basic earnings was primarily driven by a 20 percent decrease in sales volumes from own production, excluding trading activities.
“The prior period benefited from higher-than-normal work-in-progress inventory following the ACP Phase A rebuild and commissioning in the fourth quarter of 2020, which was largely refined and sold during 2021. In addition, we saw a 14 percent decrease in the 3E basket price, based on platinum, palladium, and rhodium, as prices were lower compared to the record high prices in the prior period.”
The ACP plant is a key part of Anglo American Platinum’s PGM production process, treating furnace matte from the company’s smelters.
Anchor Capital investment analyst Seleho Tsatsi said the earnings fall was a combination of a 20 percent fall in production volumes and a 14 percent fall in the platinum group metal (PGM) basket price.
“Spot prices for the three main metals (platinum, palladium, and rhodium) are about 20 percent lower in US dollars and about 10 percent lower in rands than the average of the first half of this year; January to June 2022,” he said.
Volume growth was negligible for most platinum miners and cost inflation remained high, meaning revenue declines were likely to be compounded by strong cost growth, so it is a more challenging time for the platinum sector as a whole compared to last year, he said.
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