Angloplat, the world’s biggest platinum producer, posted an expected 47% jump in interim profit on Monday, but higher costs and a cut in forecast output due to labour and safety issues cast a shadow.
Angloplat shares, which have gained around 20% this year, rose 1,1% to R1 011 by 8.25am GMT, underperforming a 2,64% gain in rival Implats.
”I’m slightly disappointed on the cost side, but otherwise the result is largely as expected,” said Heye Daun with Old Mutual Investment Group in Cape Town.
”There’s also a bit of a reduction in outlook which concerns us, so that’s disappointing.”
Anglo Platinum put out a trading statement earlier this month detailing first-half production and labour problems, and on Monday it said the issues would continue during the rest of the year.
The firm, majority owned by mining group Anglo American, said full-year refined platinum production would come in at 2,6-million to 2,65-million ounces, down from a previous estimate of 2,8-million to 2,9-million ounces.
This compares with output of 2,82-million ounces in 2006.
Headline earnings per share for the six months to end-June jumped 47% to R29,43 from R22,02 in the same period last year, at the top end of the firm’s forecast of a 40% to 50% rise.
The surge in headline EPS — which strips out non-trading, capital and certain extraordinary items — was mainly due to strong metals prices.
The price of the basket of metals produced by the company, including palladium and rhodium, soared by 51% in local terms, helped by a weaker rand currency.
But higher costs eroded some of the benefits of buoyant prices, with cash operating costs per refined ounce climbing by 19,2% to R7 200.
Skilled labour shortage
”Increasing competition for labour in South Africa and a deterioration in safety performance at our Rustenburg mine reduced our operating efficiency during 2007, resulting in lower-than-expected growth in production from operations and higher operating costs,” chief executive Ralph Havenstein said.
The lower forecast for full-year output was partially due to deteriorating safety performance at mines and a major push to change the situation.
Angloplat said on June 18 it planned to suspend output at its largest unit, Rustenburg, for about seven days due to safety concerns after 12 people died in accidents at the mine.
The company said on Monday the closure cost around 38 000 ounces of output and that a similar campaign at other mines would cut 2007 production by a further 65 000 ounces.
First-half refined platinum production fell 1% to 1,19-million ounces, partly due to a delay in processing. The amount of platinum in the processing pipeline rose by 90 000 ounces in the first half.
Angloplat, which accounts for around 40% of global platinum production, said it expected to process the pipeline stock in the second half. Platinum output for next year was forecast at 2,8-million to 2,95-million ounces.
Angloplat declared a dividend of R29 per share, about double the level of last year’s interim payout. The firm continued a policy set earlier this year of a dividend cover of one, meaning all headline earnings were paid as dividends. – Reuters