Amplats delivers $160m half-year net profit boost to Anglo American

ANGLO American Platinum (Amplats) delivered good news for its 79% shareholder Anglo American saying half-year headline earnings would come in between R3.28bn and R3.41bn – a performance that represented a $160m net profit contribution to the parent group.

Amplats is due to report its interim numbers on July 23.

“We forecast $160m net profit contribution from Anglo Platinum within Anglo American in H1’18, therefore the guided midpoint implies ~5% upside to our $1.62bn Anglo American H1’18 Headline earnings,” said JP Morgan Cazenove in a report.

Headline share earnings were likely to increase to between 1,249 cents and 1,302c/share which compares to 285c in the corresponding period of the previous financial year, Amplats said in a trading statement today.

Basic earnings for the six months were likely to increase to a profit of between R2.04bn and R2.27bn which compares to a loss of R1.19bn in the previous year. Basic share earnings would come in at between 778c and 866c/share compared to a loss of 453c previously.

“The expected increase in headline earnings and basic earnings is due to improved operational performance of the company and improvement in the rand basket price for the period,” Amplats said.

Despite the good results, JP Morgan Cazenove said it remained “downbeat” on the outlook for platinum prices in the second half of the year with US platinum prices some 8% lower since the start of June to a near five-year low of $830 per ounce.

Earnings was affected by a R600m impairment which related to the proposed sale of its 33% stake in Bafokeng Rasimone Platinum Mine joint venture to Royal Bafokeng Platinum, its joint venture partner.

Amplats and RBPlat said in announcements on July 5 that a sum of R1.86bn would be paid for the shares in the mine. The price paid represented a 15% discount to the “see-through” value of the BRPM joint venture as based on RBPlat’s 30-day volume weighted average share price as of July 4. The consideration would also take account of Amplats’ contribution in terms of its portion of capital commitments between now and the completion of the transaction, taking the total deal amount to R2.11bn.

Basic and headline earnings benefited from a R300m revaluation gain on the deferred consideration in respect of the sale of the Rustenburg Mines. Amplats said the numbers were also influenced by an R800m impairment loss on the disposal of its Union Mine and Masa Chrome. On the positive side, it received R200m in an insurance payout related to property damage suffered at its Converter Plant in 2017.