Johannesburg - Anglo American Platinum, the world’s biggest producer of the metal, said first-half profit will probably be at least 20 percent lower after a tax gain boosted earnings in the previous year and the dollar price of the metal declined.
Headline earnings in the six months through June 30 will be lower than the R2.5 billion ($169 million) reported a year earlier, the Johannesburg-based company said in a statement on Tuesday. The decrease is primarily due to higher metal inventories in 2015, which resulted in a R1.6 billion tax gain last year. A drop in platinum prices, which have fallen 6.8 percent in the past 12 months and almost halved since reaching a peak in August 2011, also trimmed earnings, it said.
The stock exchange in Johannesburg requires companies to publish trading statements as soon as they are reasonably sure that results will differ by at least 20 percent from the previous period. Amplats will release a further announcement once it has more certainty about the range of the decline in profit, it said.
Amplats, as the company controlled by Anglo American is known, and other major producers such as Impala Platinum Holdings and Lonmin are staving off the plunge in prices by selling or closing mines, reining in expenditure and reducing thousands of jobs. The cutbacks are weighing on growth in South Africa, the source of more than 70 percent of the world’s platinum and a country where more than one in four in the workforce is unemployed.
Amplats will place all expansion projects on hold as it expects prices to remain depressed after it wrote down mines and operations by R14 billion, it said in February. It’s delaying decisions on whether to proceed with capital projects until 2017.
Shares in the producer, which fell for six straight years through 2015, have more than doubled this year. The stock erased an earlier drop of as much as 3.2 percent to trade 1.3 percent higher at R384.08 by 9.45am in Johannesburg, giving Amplats a market value of R104 billion.
BLOOMBERG