Shares in Impala Platinum (Implats) inched up 1.49% on the JSE on Friday after the company reported that earnings for the interim period to end December would be higher, despite taking a knock from Eskom load shedding and elevated inflation for its operations in Zimbabwe and Canada.
Implats closed Friday’s trade session at R208 per share as investors warmed up to the company’s firmer financial performance for the period under review and ignored the severe impact of load shedding on operations.
Half-year earnings before interest, tax, depreciation and amortisation (Ebitda) will amount to R24.5 billion, largely unchanged from the 2021 same contrasting period. The 2021 comparative period’s full year constituted a strong financial out-turn for which Implats is paying a discretionary employee bonus.
“Basic and headline earnings, and basic and headline earnings per share for the (December 2022 half year) period are expected to be within the 20% variance range prescribed by the JSE Listings Requirements,” Implats said in a trading update on Friday.
Implats finished the period with 140 000 6E ounces of excess inventory and R27bn in cash balances.
Nonetheless, during the interim period under review, Implats suffered from escalating load shedding by Eskom. This impacted its South African processing operations, with production of PGM concentrates for the period remaining unchanged at 1.62 million ounces.
Mining output from own operations was, however, 2% higher at 1.18 million ounces. Volumes from joint venture operations stood at 271 000 ounces. Third party volumes sagged by 10% to 169 000 ounces.
Intensifying load shedding slowed Implats’s refined production by 9% to 1.48 million ounces. Subsequently, the impact of Eskom load shedding on Implats’ concentrate and refined production was 9 000 and 38 000 ounces, respectively.
“Smelting capacity in the period was constrained by the increased occurrence and severity of load curtailment, and exacerbated by the commencement of the scheduled rebuild of the Number 4 Furnace in Rustenburg,” Implats said.
Further headwinds emanated from depreciation in the rand, which worsened the impact of high energy and consumables pricing for Implats’ Zimbabwean and Canadian operations.
There was some respite though from a robust pgm pricing basket and stronger demand for the world number two platinum producer’s primary metals. It said benefits arising out of the stronger demand and higher prices for its pgm commodities “flowed through to group earnings and free cash flow” generation for its operations.
Analysts said the half-year performance and closing inventory puts Implats in a better position against a difficult background and that it “could have been worse” as a result of load shedding and “geo-political” disturbances.
Sales volumes for the period declined by 2% to 1.52 million 6E ounces from the comparative period, but the company benefited from destocking of refined inventory to offset the impact of maintenance of its furnace.
“The 9% decrease in the achieved US dollar basket price was offset by the 16% weakening of the rand exchange rate, resulting in a 5% improvement in Group sales revenue to R38 117 per 6E ounce sold.”
Capital expenditure for the period is expected to amount to R5bn compared to R3.6bn in the prior year comparative period due to higher rates of replacement project spend.
BUSINESS REPORT