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Amplats, the world’s biggest platinum producer, delivers whopping dividend as the company rides the PGM bull

Anglo American Platinum (Amplats), the world’s biggest platinum producer, yesterday delivered a whopping R80 billion dividend to its shareholders as it posted an annual 160 percent hike in profit, bolstered by higher platinum group metals prices (PGMs) and increased sales. Photo: File

Anglo American Platinum (Amplats), the world’s biggest platinum producer, yesterday delivered a whopping R80 billion dividend to its shareholders as it posted an annual 160 percent hike in profit, bolstered by higher platinum group metals prices (PGMs) and increased sales. Photo: File

Published Feb 22, 2022

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ANGLO American Platinum (Amplats), the world’s biggest platinum producer, yesterday delivered a whopping R80 billion dividend to its shareholders as it posted an annual 160 percent hike in profit, bolstered by higher platinum group metals prices (PGMs) and increased sales.

The record production and pricing resulted in its headline earnings a share (heps) for the year ended December 31 increased to R79bn, equal to R300.42 per share from R30bn, or R115.54 a share the prior year.

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This as the mining firm reported a 22 percent increase in the rand basket price for its PGMs to R445.11 per PGM ounce. The year-on-year surge in pricing was driven by rhodium, which in dollars averaged $20 109 (R304 803) an ounce (oz) about 79 percent higher year-on-year.

During the reporting period there was a rise in the average price of platinum, which was 23 percent higher and palladium, 9 percent higher, averaging a record $2 388/oz for the year.

Amplats chief executive Natascha Viljoen said: “Anglo American Platinum has once again delivered safe production and record operational and financial results, despite the ongoing effects of Covid-19 on our day-to-day operations.“

The group’s cash dividend consisted of R49 per share base dividend in line with the company’s 40 percent of headline earnings payout ratio and a further R76 per share special dividend equal to R33bn. The special dividend took the payout to 100 percent of second-half headline earnings.

“Given the value distribution to other stakeholders, our strong balance sheet, a healthy market outlook, and confidence in the underlying cash generation of the business, the board has declared a second-half dividend,” Viljoen said.

Amplats said it had guided to metal-in-concentrate production of 4.1 million to 4.5 million oz for the current year. The guidance was influenced by planned maintenance at the Mogalakwena

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South concentrator, which had been aligned to the scheduled rebuild of the Polokwane smelter. There would be a slight metal-in-concentrate build of about 100 000 oz.

Umthombo Wealth chief investment officer Alex Duys said Amplats results were excellent and probably as good as it can get but said it was probably unlikely for the company to sustain such stellar results “unless we see continued growth in the rand PGM basket price, no production headwinds, and continued discipline on cost management.“

“We have been very constructive on Amplats and the platinum sector since 2017.

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“Going forward most of the returns will most likely be from dividends, as to capital growth. We thus still own Amplats but at lesser conviction as before. PGM supply has recovered strongly since the low of Covid-19, but demand has not followed suit due to semiconductor shortages.

“For the PGM price basket to remain resilient, we will need a recovery in automotive demand,” Duys said, adding there were concerns about the guidance regarding capital expenditure, which was substantially higher than what was anticipated.

Seleho Tsatsi, an investment analyst at Anchor Capital, said yesterday that in 2020, Amplats’ volumes were down significantly because of an explosion at a converter plant that then had to be temporarily closed. Volumes recovered back to normal levels in 2021.

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