[miningmx.com] – ANGLO American Platinum (Amplats), the world’s largest platinum producer, spelled out the full impact of impairments and restructuring announced last year saying in a trading statement today that it would report a basic earnings loss of up to R12.2bn for the 2015 financial year.
Impairments and write-offs totalled R14bn although only R1.8bn of these were written up against headline earnings which demonstrates the company’s performance excluding the impact of non-cash items.
Consequently, headline earnings were likely to be no less than R60m or some 92% lower year-on-year while share earnings would fall to 25c/share compared to 301c in the previous year on headline earnings of R786m.
Amplats unveiled a slew of write-downs last year totalling R14bn as well as the write-off of loans made to joint venture partner Atlatsa Resources. Restructuring costs, largely related to the re-organisation of support and service functions, came in at R850m.
The group also implemented new operational plans aimed at producing positive cash flows and further increase efficiencies “… which ultimately led to a reduction in contractors and employees,” the company said.
The results may have been worse but for an increase in metal inventory which equated to a gain of 599 cents per share post-tax. The most damaging hit to share earnings was the Atlatsa loan write-off which was equal to 686c/share while restructuring costs equated to 325c/share, the company said.
Amplats said that excluding these one off items, it would have increased headline earnings to 412c/share compared to 301c/share previously. The company is due to report its full-year figures on February 8.
Amplats said last year that it had suspended development of its Twickenham and Tumela 5 project at Amandelbult near Rustenburg. It also wrote off R3.5bn of its investment in Royal Bafokeng Platinum.
For all the current pain, however, analysts think that Amplats is taking the correct action. “Amplats is successfully positioning itself to continue to ride out an environment where sector economics remain depressed,” said RMB Morgan Stanley in a report issued on January 14.
“Our recommendations are still focused on the ones we see as survivors with Anglo Platinum … at least having some good, positive cash generating assets and able to get out of the marginal stuff by selling it [Rustenburg Mines] to Sibanye [Gold],” said Leon Esterhuizen, analyst for CIBC Capital Markets in a note published in December last year.
