Implats expects 62% rise in interim earnings
Implats said for the six months to December 2019 it was expecting headline earnings per share of up to R4.65 – a 50 percent jump from the R3.10 a share recorded in 2018.
“Despite sales volumes for the period being lower than the comparative period due to the impact of ongoing planned smelter maintenance on refined production, gross profit is expected to increase by more than 90 percent to approximately R6bn, primarily due to the higher rand platinum group metals (PGM) basket price,” said the group.
Implats operates mines in Rustenburg in the North West, Zimbabwe Platinum (Zimplats) and acquired Canada’s North American Palladium in December. The JSE-listed group said it expected a hike of up to 57 percent in basic earnings to R3.63bn, compared with R2.3bn in 2018.
Earnings a share would likely increase by up to 46 percent to up to R4.69 a share, compared with R3.21 a share in 2018, the company said.
Record palladium and rhodium prices have been driving the rally in the platinum group metals basket price this year amid supply concerns helping companies rake in profits.
Implats, however, said the increase was partially offset by the once-off expense of R509 million or 66 cents per share, relating to the incentivised early conversion of the US dollar convertible bonds during the period.
Last July, the group said it would issue a $250m (R3.69bn) debt-to-equity swop in a bid to cut debt and make the most of the reprieve of surging metal prices and the weak rand.
It invited bondholders to convert bonds to equity, which once completed would result in significant savings.
Around 99.9 percent of the US dollar convertible bondholders elected to exercise their option to convert their bonds to ordinary shares.
Implats also said yesterday that the R238m restructuring costs and the higher taxation charges due to improved profitability also offset the increase in earnings. Implats shares declined by 3.42 percent to close at R145.11 on the JSE on Thursday.
Seleho Tsatsi, an investment analyst at Anchor Capital, said yesterday that earnings were weaker than expected most likely due to lower refined volumes. “Implats refined volumes appear likely to have come in below expectations,” Tsatsi said.
Implats is scheduled to release its financial results for the period on February 27.