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RESULTS: Angloplat
Johannesburg, Feb 8 (I-Net Bridge) Anglo Platinum (Angloplat, AMS), the world’s largest platinum producer, on Monday reported a 95% fall in diluted headline earnings per share to 297 cents for the year to end December 2009 from 5,586 cents in the year to end December 2008.
Headline earnings decreased by 95% to 710 million rand, or 298 cents, from 13.29 billion rand, or 5,609 cents a share, a year ago.
The company’s refined platinum production was up 3% to 2.45 million ounces.
Refined platinum sales for the year amounted to 2.57 million ounces compared to 2.22 million ounces in 2008, representing an increase of 16%.
The increase was due to unsold metal at the end of 2008 being available for sale in 2009 and the achievement of higher refined production volumes.
Net sales revenue decreased by 14.1 billion rand to 36.7 billion rand, primarily the
result of lower US dollar metal prices achieved on metals sold, which accounted for 21 billion rand, offset by higher volumes of metals sold increasing revenue by 7 billion rand.
Operating profit dived 95% to 921 million rand from 17.65 billion rand last year while profit for the year fell 79% to 3.13 billion rand from 14.66 billion rand a year ago.
No dividend was declared and the company said payments would be resumed when market conditions and the operating environment permit.
The company said the main factors contributing to the dive in headline earnings were lower US dollar prices realised on metals sold, offset by higher sales volumes and the receipt of insurance income.
Headline earnings exclude profits of 2.5 billion rand realised on the conclusion of
Anglo Platinum’s BEE transactions with Anooraq Resources Corporation (ARQ) and Mvelaphanda Resources (MVL).
Basic earnings per share, which include the profits on the transactions, amounted to
1,269 cents, down 79% on 2008’s 6,011 cents.
“While the global financial crisis that started during the last quarter of 2008 curbed
demand for platinum group metals (PGMs) and caused prices to decline significantly, the second half of 2009 brought early signs of economic recovery, with a consequential increase in demand and recovery in prices with platinum increasing by 60% from US$922 per ounce at the beginning of 2009 to US$1,475 at end December 2009,” Angloplat said.
The average prices achieved on platinum, palladium, rhodium and nickel sales for the year were US$1,199 per ounce, US$257 per ounce, US$1,509 per ounce and US$14,424 per tonne respectively.
The 2009 average rand basket price achieved was 14,115 rand per platinum ounce, a reduction of 37% when compared with the 22,348 rand price in 2008.
The company’s focus on cost management, inbound supply chain projects and asset optimisation initiatives started to bear fruit during the year with the cash operating cost per equivalent refined platinum ounce remaining essentially flat at 11,236 rand compared with 2008.
“This was achieved despite upward inflationary pressure caused by wage and electricity tariff increases in excess of consumer price inflation,” Angloplat said.
Cost of sales increased by 3% to 34.7 billion rand.
Net debt at the end of 2009 increased to 19.3 billion rand from 13.5 billion rand at the end of December 2008.
While operating activities produced a positive cash flow of 4.7 billion rand, this was down 73% from 2008 and funding of some 9.7 billion rand of capital expenditure was largely through increased debt.
This cash outflow was mitigated by the proceeds from the successful conclusion of the BEE transactions with Mvela and Anooraq.
During the second half of 2009, the company said that it was considering balance sheet restructuring options and has consequently announced its intention to issue equity to the value of 12.5 billion rand in a rights offer.
“After considering the current level of Anglo Platinum’s debt, our Board believes that raising additional equity through a rights issue will provide the company with a more balanced capital structure,” Angloplat said.
The proceeds from the rights offer will be used to repay long-term debt.
As at end December 2009 Anglo Platinum had gross debt of 23 billion rand, of which 20 billion rand was outstanding under facilities provided by our largest shareholder Anglo American (AGL) and 3 billion rand outstanding under facilities provided by other financial institutions.
“Anglo Platinum experienced very challenging market conditions during 2009 but used the opportunity to reconfigure the cost base, improve production and take a significant step forward in safety efforts,” Angloplat said in its results commentary.
“While our financial results are significantly below those of previous years, our operating performance improved and we increased production and sales while keeping unit costs essentially flat,” it said.
As part of the restructuring process, Angloplat optimised the source of ounces across its portfolio.
This included placing three of its high cost shafts into ‘care and maintenance’
indefinitely.
These shafts included Siphumelele 3 shaft, Siphumelele 2 Shaft, and Khuseleka 2 Shaft at Khuseleka Mine.
Overall the company reduced its labour complement by 15,752 people during the year or by 18,786 people from October 2008.
Looking ahead, Angloplat said it expects the platinum market in 2010 to return to a
position of deficit as a result of a moderate increase in supply but a significant recovery in demand.
“South African production is expected to remain constrained as producers adapt to a safer working environment and as lower rand metal prices result in production being restricted at high cost operations across the industry,” the company said.
Given the market conditions Angloplat said it believes that the appropriate level of
production for 2010 is 2.5 million ounces of refined platinum.
It said it is also aiming to produce this volume at a unit cost of just over 11,000 rand an ounce, the same level as in the preceding two years and with labour reductions largely complete, the company said it would spend the year working on improved productivity.
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