Impala Platinum Sees Significant Drop in Interim Profits Amid Lower PGM Prices
Impala Platinum Holdings (Implats) reported a notable decline in its earnings for the six-month period ending December 31, primarily due to a significant reduction in revenue, influenced by a 37% decrease in the dollar revenue per 6E ounce sold. This decline was somewhat mitigated by an 8% depreciation in the rand, according to the company's recent trading statement.
Despite experiencing a 12% increase in sales volumes, thanks to the first-time interim consolidation of Impala Bafokeng and enhanced operational efficiency, the company's cash costs were adversely affected. The inclusion of Impala Bafokeng's cost base and the weaker rand's impact on the translated costs of Zimplats and Impala Canada contributed to the financial strain.
Implats anticipates its headline earnings to drop significantly, by between 75% and 82%, settling between ZAR2.5 billion ($132.5 million) and ZAR3.5 billion ($185.5 million). Similarly, headline earnings per share (Heps) are expected to decrease by 76% to 83%, ranging from 279 cents (14.79 cents USD) to 391 cents (20.73 cents USD), in stark contrast to the prior comparable period's headline earnings of ZAR14 billion ($742 million) and Heps of 1,654 cents (87.66 cents USD).
The basic earnings have also been impacted by a ZAR701 million ($37.15 million) impairment of property, plant, and equipment at Impala Canada, attributed to a "further material decline" in the palladium price and changes in planned operational parameters at the site. Additionally, a R987 million ($52.31 million) impairment at the Two Rivers Platinum joint venture was recorded. This impairment resulted from the combined valuation effects of lower rand platinum group metal (PGM) pricing and increased near-term capital expenditures from the under-construction Merensky Project.
As a result, basic earnings and earnings per share are projected to plummet by 86% to 93%, to between ZAR1 billion ($53 million) and ZAR2 billion ($106 million), and between 112 cents (5.94 cents USD) and 224 cents (11.87 cents USD) per share, respectively.
