NORTHAM Platinum expects a decrease of between 76.6% and 86.6% in headline earnings per share for the year to end-June because of sharply lower platinum group metal (pgm) prices.
In a trading statement issued today Northam reported that refined metal production rose 10.3% to 892,876oz (2023 financial year – 809,775oz) but sales revenue dropped 22% to R30.8bn because of a 35.5% decrease in the rand pgm basket price to R24,178/oz (R37,488/oz).
End result was a 68.8% plunge in gross profit to R4.8bn (R15.4bn).
The Northam trading update said that “the current price environment may last for some time and this, combined with higher general inflation, is placing pressure on the entire pgm sector. Relative positioning on the industry cost curve and the ability to retain operational flexibility and balance sheet strength are becoming increasingly important.
“The global economic outlook remains uncertain resulting in volatile metal markets and exchange rates. Prevailing pgm market conditions and the material decline of the rand basket price have negatively impacted the profitability and rate of cash generation of the group.
“A raft of global geopolitical and macro-economic issues has the potential to cause further disruption to the pgm markets and metal prices.
“The group’s financial performance is influenced by the exchange rate and commodity prices together with the stability of Northam’s broader operating environment. Cash generation and preservation will remain particular focus areas in the coming year.”
The statement emphasised Northam’s strategy of growing production to be key to the group’s future commenting, “we operate a largely fixed cost business and consider increasing our production, and doing so efficiently and sustainably, to be our best defence against current global inflationary pressures and fluctuating metal prices.
“Our capital allocation and treasury decisions have been guided by our growth strategy and our results have benefitted from our consistent approach to growing our production base down the industry cost curve on a sustainable basis.”
Northam spent R4.6bn on capital expenditure in the year to June 2024 but notes that the group capital programme “has and will be amended when and where prudent taking into account the changing landscape and new market insights.”
