IMPALA Platinum (Implats) declared a final dividend of R10.50 taking the total dividend for its 2022 financial year to R15.75 equal to 48% of free cash flow – higher than the 30% set down in its dividend policy.
The higher-than-policy payout was flagged by Implats at the interim stage, but it comes against increasing uncertainty in market conditions for platinum group metals (PGMs) where clogged supply chains has subdued automotive production which PGMs supply. Implats also faces challenges getting operations back on track in the current year.
Nico Muller, CEO of Implats said in notes to the firm’s published results today that Implats would use the current year to focus on re-establishing “operational momentum” at its Canadian operations and at Impala Rustenburg which represents the bulk of its own managed southern African mines.
As reported in the firm’s trading statement, 6E concentrate production fell 4% partly owing to a decline to 2.27 million ounces in output at its managed mines and a similar decline in joint venture production. Third party concentrate supply also fell.
Group refined 6E production of 3.09 million oz fell 6% partly owing to extended maintenance which was required at the Number 3 furnace at Impala Rustenburg.
An underlay to these declines was heightened community disruption related to the after-effects of Covid-19, absenteeism as well as broad social factors such as unemployment which led to disruptive protests.
Lower volumes and macroeconomic pressure resulted in significant cost inflation. Implats reported a 17% increase in group unit costs per 6E to R17,364/oz.
Dollar and rand revenue per 6E oz also declined – some 4% during the year – off record highs with the latter coming out at R37,703/oz. In addition to softer automotive demand, Muller said the Covid-19 related lockdown in China in the first six months of the year under review and “the deteriorating outlook for global growth, in Europe in particular” had also negatively affected PGM prices. Industrial demand is also expected to soften albeit off a high base.
The outcome at the earnings before interest, tax, depreciation and amortisation (EBITDA) level was a 13% year-on-year decline to R53.4bn and a 12% and 17% decline in headline earnings to R32bn and R38,53/share respectively. As of June 30 the group ended with cash of R26.5bn.
Despite the lower earnings, the cash distribution indicates Implats is in decent health given capital expenditure during the year under review was R9.1bn.
Muller said in February that the group planned to spend about R50bn in expansion of the its concentrate and refining capacity over the next five years.