Implats benefits from higher PGM prices


Implats benefits from higher PGM prices

Published Date: 2020-02-07 | Source: Stephen Gunnion | Author: Stephen Gunnion

Implats benefits from higher PGM prices

Its shares fell close to 10 percent at their worse despite it flagging a strong rise in first-half profit.

Impala Platinum says it will report a strong rise in first-half earnings as higher platinum prices offset a dip in volumes.

In a trading statement, the platinum producer said it expected gross profit for the six months to end-December to be more than 90% higher at around R6 billion due to the higher rand price for its platinum group metals (PGMs). Headline earnings would be between 42% and 62% up, while headline earnings per share would rise by 32% to 50%. Sales volumes declined over the period due to the impact of ongoing planned smelter maintenance on refined production.

Implats said the increase in earnings was partially offset by a once-off expense of R509 million, or 66c per share, related to the incentivised early conversion of its US dollar convertible bond during the period, which resulted in a higher number of shares in issue. It also incurred restructuring costs of R238 million, or 31c per share, and higher tax charges due to the improved profitability. It said the comparative period included the non-taxable income from Zimbabwean unit Zimplats of export incentives worth R417 million, which didn't reoccur in the current period.

Last July, almost all investors in Implats' $250 million convertible bond took it up on its offer of an early conversion to equity - with a cash sweetener. It asked to redeem the bonds ahead of their 2022 maturity date due to the windfall it received from the higher rand PGM price. By restructuring its debt, it said it would reduce its annual interest payments.

Its shares fell close to 10% before recovering to close 3.4% lower at R145.11 yesterday. Other platinum producers were also weaker as platinum and palladium prices retreated. Implat's results are due for release on 27 February.

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