Shares in Impala Platinum slumped nearly 4% on Monday after the group flagged a weaker earnings outlook for the year to end-June.
The platinum group metals (PGM) miner expects to report headline earnings per share (HEPS) of 56c-100c, down 63%-79% from the previous financial year primarily due to the adverse effect of lower sales volumes and inflation on earnings, while revenue per ounce sold remained flat.
On Monday, shares in Impala closed 3.8% weaker at R169.03, but they are still up 92.63% year to date.
The company has nearly doubled in value this year on soaring PGM prices, as SA’s shrinking supply and the growing demand for hybrid electric vehicles pushed platinum to its highest level in more than a decade last month.
After a recent surge in prices, the metal is now on track to record its best year since 2009, having gained nearly 50% since the end of December.
However, the forecast drop in Impala’s headline earnings suggest that the company is still feeling the pain after three years of suppressed PGM prices.
Last year, 4,000 workers lost their jobs as Impala restructured its operations in line with stubbornly low prices. While the group has not announced any further production cuts, it did warn in its interim results that ongoing pressure on PGM prices may warrant further production cuts this year.
The group has already skipped its interim dividend for the six months to end-December, as low PGM prices put pressure on its balance sheet. Headline earnings were down 43% in the first half despite a 5% uptick in sales volumes.
Impala cited a weaker operational performance for the year, with operational disruptions weighing on output across several of its key operations.
Total PGM production eased by 3% year on year, driven primarily by a weaker performance at its managed operations, which recorded a 4% year-on-year drop.
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