/ 18 February 2010

Implats posts fall in first-half earnings

Impala Platinum (Implats), the world’s number two platinum miner, on Thursday posted a 76% fall in first-half earnings due to weaker metal prices, and forecast a recovery as the precious metal’s market improves.

Implats suffered prolonged safety stoppages that hurt production, a two-week long strike by thousands of workers, and a rising wage bill last year at a time when metal prices were weakened by a global recession.

Headline earnings per share, the key measure of profits in South Africa, fell 76% to R2,12 for the half-year to December, while revenue slid by 32% to R11,1-billion.

The metal, used in jewellery and in catalytic converters to cut pollutants from car exhausts, saw its price dip sharply largely because demand for cars was depressed globally.

Implats said production rose 2% to 895 000 ounces, and reiterated its plans to grow output to 2,1-million ounces a year by 2014, through expansions.

“The period under review has been one of the most difficult in the company’s history,” CEO David Brown said in a statement.

But Brown forecast another year of constrained supply together with recovering demand in the platinum market, which was likely to be aided by the recent launch of the US platinum and palladium exchange-traded funds.

“This time a year ago the short-term was clouded with uncertainty as to the extent and depth of the recession. While a double-dip recession cannot be ruled out, the first signs of a global economic recovery are becoming apparent,” he said.

South Africa produces four-fifths of the world’s platinum and Implats alone supplies 25% of the precious metal, mainly from its South African operations and mines in Zimbabwe.

Earlier this month Implats’s bigger rival and mining bellwether Anglo Platinum — a unit of global miner Anglo American — reported a 95% drop in full-year headline earnings per share for the full year to December, also hit by weaker metal prices. — Reuters