Anglo Platinum scraps final dividend

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Anglo Platinum on Monday scrapped its final dividend, abandoned plans to increase production of the highly resistant metal and forecast up to 10,000 job cuts.

The world’s biggest platinum producer is suffering from a collapse in demand for the metal, which has been among the hardest hit by the global economic downturn.

Nonetheless, the world’s biggest platinum miner unveiled headline earnings of R13bn, an 8 per cent year-on-year increase for the 12 months to December, despite lower operating profit due to rising costs.

The increase was due to asset sales and depreciation of the rand, which meant revenues paid in dollars went 15 per cent further in covering costs denominated in the South African currency.

Announcing that the company will this year aim only to match the 2.4m ounces of platinum it produced last year, Neville Nicolau, chief executive, said: “We believe that supply [is] already at levels that will match our forecast on demand in 2009.”

The prediction of a balanced market from the company with a 40 per cent market share appeared to cheer investors. Anglo Platinum’s shares rose by more than 4 per cent, giving it a market capitalisation of over R104bn, though this is still 60 per cent lower than a year ago.

Some 60 per cent of platinum – predominantly mined in South Africa – is used in auto-catalysts. The woes of carmakers dragged the platinum price from highs close to $2,300 in the first half of last year to lows close to $700 in November.

So far this year the metal has traded at about $900 per ounce, with even bullish forecasters reluctant to predict a recovery to more than $1,400 per ounce.

”Our strategy for the coming year will be to really attack unit costs,” which had risen by more than one-third to an ”unacceptably high” R11,100 per ounce, Mr Nicolau said. ”The target is no real increase year-on-year.”

But with net debt that leapt by 230 per cent last year to R13.5bn – Mr Nicolau said the company aimed to dismiss 8,000 contractors and employees by the middle of the year, with a further 2,000 to follow if times remain tough. The total workforce last year was 75,000.

The decision to pay no final dividend was expected by some analysts but will not lighten the mood at Anglo Plat’s parent, which will deliver its own results on Feb 20. Anglo American, which at June held a 78 per cent stake, derived 25 per cent of its operating profit in the first half of last year from Anglo Platinum.

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