Amplats Sees Profit Falling on Platinum Drop, Tax Adjustmentby
Platinum prices have almost halved since high reached in 2011
Stock-take adjustment resulted in tax gain last year
Anglo American Platinum Ltd., the world’s biggest producer of the metal, said first-half profit will probably be at least 20 percent lower after a tax gain boosted earnings in the previous year and the dollar price of the metal declined.
Headline earnings in the six months through June 30 will be lower than the 2.5 billion rand ($169 million) reported a year earlier, the Johannesburg-based company said in a statement Tuesday. The decrease is primarily due to higher metal inventories in 2015, which resulted in a 1.6 billion-rand tax gain last year. A drop in platinum prices, which have fallen 6.8 percent in the past 12 months and almost halved since reaching a peak in August 2011, also trimmed earnings, it said.
The stock exchange in Johannesburg requires companies to publish trading statements as soon as they are reasonably sure that results will differ by at least 20 percent from the previous period. Amplats will release a further announcement once it has more certainty about the range of the decline in profit, it said.
Amplats, as the company controlled by Anglo American Plc is known, and other major producers such as Impala Platinum Holdings Ltd. and Lonmin Plc are staving off the plunge in prices by selling or closing mines, reining in expenditure and reducing thousands of jobs. The cutbacks are weighing on growth in South Africa, the source of more than 70 percent of the world’s platinum and a country where more than one in four in the workforce is unemployed.
Amplats will place all expansion projects on hold as it expects prices to remain depressed after it wrote down mines and operations by 14 billion rand, it said in February. It’s delaying decisions on whether to proceed with capital projects until 2017.
Shares in the producer, which fell for six straight years through 2015, have more than doubled this year. The stock erased an earlier drop of as much as 3.2 percent to trade 1.3 percent higher at 384.08 rand by 9:45 a.m. in Johannesburg, giving Amplats a market value of 104 billion rand.