Anglo American Platinum (Amplats) hiked its dividend by nearly 200 percent as it returned R3 billion to shareholders in the half-year to the end of June after more than doubling net cash and earnings on the strong platinum group metals (PGM) price environment.
The world’s biggest platinum producer declared a cash dividend of R11 from R3.74 last June, when it declared a dividend payment for the first halfyear since 2011. Chief executive Chris Griffith said the business had strong fundamentals due to its conservative approach when the subdued price environment previously hurt the platinum industry. “This is a very much stronger business today because of the actions we have taken in recent years, and I’m pleased to say that there are further opportunities to unlock the full potential from our operations,” Griffith said.
Amplats restructured its footprint at the height of the prolonged depressed platinum price environment by cutting loss-making assets. It divested from Union Mine, placed the loss-making Bokoni on care and maintenance, and sold all its Rustenburg assets to Sibanye-Stillwater. Amplats said it continued with studies on how to unlock value from the Mogalakwena and the Mototolo/ Der Brochen projects.
The group reported a 120 percent increase in headline earnings to R7.4 billion on higher PGM prices and a R1bn stock count adjustment compared with a stock count adjustment loss of R400 million in the comparative period. It said the strong numbers were due to the weakening of the rand that saw a 33 percent increase in the platinum basket price and a 16 percent increase in US dollar platinum basket price. Amplats, a unit of diversified global miner Anglo American plc, said its net cash position jumped to R6bn from R2.9bn in December 2018.
Griffith said the financial performance came despite power outages and the three-week long illegal strike at Mototolo mine in Limpopo, which grappled with geological faults. Eskom’s power disruptions and the strike contributed to the 2 percent decline in production to 2.1 million ounces from 2.2 million in June last year, while the cost pressures crept in with cash cost per PGM produced increasing 12 percent year-on-year, the company said. Griffith warned that the Association of Mineworkers and Construction Union’s demand for a 48 percent monthly salary hike to R17 000 posed a potential headwind.
“We have just commenced wage discussions with the unions. We have not put our offer on the table yet. We don’t want to embed unsustainable cost increases. While it will be difficult wage negotiations, prices go up and come down,” said Griffith. Seleho Tsatsi, an investment analyst at Anchor Capital, said the results were in line with the company’s trading statement last week. “Amplats’ valuation is at a premium to the sector, which can be justified by the firm’s more defensive operations and a balance sheet that’s been more conservatively managed since the PGM downturn,” said Tsatsi. Amplats rose 0.73 percent on the JSE yesterday to close at R836.80.