CAPE TOWN - Shares in Impala Platinum (Implats), the world’s second biggest platinum producer, dipped 4.75% on the JSE yesterday following news it would swing to a loss for the full year to June. The share price later closed 1.58% lower on the JSE at R38.58.
Implats told shareholders yesterday that the group was expecting a loss of between R1.25 a share and R1.50 in the year to June, compared with headline earnings of 12c a share in the year to June 2016.
Implats also flagged a steep drop in basic earnings a share. It expected a basic earnings a share loss of between R10.30 and R12.35 a share, compared with a 10c earnings a share loss for the corresponding period in the previous year.
The company was scheduled to release its full year results on September 14.
It blamed the losses on an income tax credit being negatively effected by both an increase in additional profits tax for Zimplats in the current year and a non-recurring tax credit on a bad debt in the prior year. Impala owns an 87% stake in Zimbabwean subsidiary, Zimplats.
Anchor Capital investment researcher Seleho Tsatsi said the losses came as no surprise, because all platinum group metals (PGM) miners were struggling. “Implats is struggling for the same reason that all PGM miners are struggling at present - low prices.
“PGM prices need to recover rather materially to justify current share prices in the sector,” said Tsatsi.
The platinum price had plummeted from about $1300 (R17 125) an ounce in August 2012 to the current $980 an ounce level.
Although Implats was under pressure, Lonmin, the world’s third-biggest platinum producer, was in a more urgent position, Tsatsi said. Lonmin earlier this month announced plans to generate cash and to preserve cash by reducing fixed costs through cutting annual overhead costs by a minimum of R500m by the end of the year ending September 2018.
The company made management changes after appointing former Gold Fields and Royal Bafokeng Platinum executive Nico Muller as its new chief executive following the resignation of Terence Goodlace, who stepped down from the platinum firm in November last year.
Muller assumed the role in April, and as a mining specialist the market expected his appointment to help improve the company’s safety performance and turning around the ship.
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Muller’s top priority would be to address Implats’ operational challenges.