Northam flags record profit


Northam flags record profit

Published Date: 2020-02-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Northam flags record profit

First-half operating profit likely tripled and the platinum producer has bought more of its Zambezi prefs without increasing its debt ratio.

Northam Platinum says it will report record first-half operating profit after it produced more metal and received higher prices for it.

In a trading statement, the group said it also achieved record production in the six months to end-December, with output from its own operations increasing by close to 20% and sale volumes rising 12%. As a result it expects to report revenue of between R7.7 billion and R7.9 billion for the period, up from R5 billion a year earlier. Operating profit is likely to triple to between R2.9 billion and R3.1 billion from R1 billion previously.

It said shareholder value was also boosted by the acquisition of Zambezi preference shares, which it pays dividends on. During the period, it acquired 32.5 million of the prefs for R2.4 billion. It now holds 22.9% of all Zambezi prefs in issue, whilst maintaining a debt to EBITDA (earnings before interest, tax, depreciation and amortisation) ratio of 1 to 1. The shares were issued to empowerment partner Zambezi Platinum in 2015 as part of the funding structure that gave it a 31.4% stake in the platinum producer. Each of the preference shares is backed by an Northam ordinary share.

The group expects normalised headline earnings, which are adjusted for the impact of its black economic empowerment transaction, to be above R1.8 billion from R553 million in the previous comparative period. Headline earnings per share will swing from a 19c loss to as much as 330.20c.

Its results are scheduled for release on 28 February. It's shares rose 1.6% to R125.79 yesterday. The trading statement was released after the close of trade.

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