Anglo Platinum Falls on Surprise Profit Drop: Johannesburg Mover
January 20, 2012, 12:21 AM ESTBy Carli Lourens
Jan. 19 (Bloomberg) -- Anglo American Plc’s platinum unit, the largest producer of the metal, was the biggest loser among the 40 largest companies trading on Johannesburg’s bourse after posting an unexpected retreat in full-year profit.
Anglo American Platinum Ltd., based in the city, said earnings excluding one-time items probably fell as much as 34 percent to 12.77 rand ($1.60) a share from 19.35 rand a year earlier, compared with the median estimate for adjusted earnings of 23.77 rand of 14 analysts surveyed by Bloomberg.
The stock slumped as much as 5.3 percent, the most since Sept. 5, to 538 rand, and traded 4 percent down at 545.15 rand by 11:21 a.m. That was the biggest retreat among the companies in the FTSE/JSE Africa Top40 Index.
The decrease “is primarily as a result of the impact of the one-off accounting charge for the broad-based community development transaction” of 1.07 billion rand, the company, also known as Amplats, said in a statement. The “high number of safety stoppages resulting in lower production, as well as high industry cost inflation, particularly for labor and electricity,” also eroded profit, it said.
Basic earnings per share will be 60 percent to 70 percent lower than the 39.09 rand of a year earlier, Amplats said, adding it will release full statements on or about Feb. 13.
The announcement “disappoints,” SBG Securities Ltd. said in a note, adding its 22.48-rand estimate didn’t account for a one-time charge of 4 rand a share.
Stake for Communities
Amplats said Nov. 7 it will place a 2.33 percent stake worth about 3.5 billion rand into two trusts to raise money for communities near its mines in South Africa, the nation with more than three-quarters of known global reserves of platinum.
Amplats has struggled to contain costs over the last eight years, HSBC Holdings Plc, which has a “neutral” rating on the stock, said in a November note. In that time, its per-unit costs moved from being on a par with main rival Impala Platinum Holdings Ltd. to being 28 percent higher in 2010.
Amplats is Citigroup Inc.’s least-favored South African platinum producer, it said on Jan. 17. The producer is the bottom pick, together with Lonmin Plc, at SBG, it said in a Jan. 16 note.
The company lost 35 percent in Johannesburg trading in the past five years compared with Impala’s 9.1 percent decline.
Chief Executive Officer Neville Nicolau in July maintained his target of refining and selling 2.6 million ounces for the year, even after eight deaths in the first half led to mine stoppages and curbed a planned surge in output. Production in the first half rose 17 percent to 1.17 million ounces at Amplats, which also mines palladium and rhodium.
First-half costs climbed 13 percent from a year earlier as gains in electricity, diesel, explosives, steel and wages “materially” exceeded consumer-price inflation, Nicolau told investors at the time. Amplats agreed in September to increase workers’ pay by between 8.5 percent and 10 percent.
National electricity utility Eskom Holdings SOC Ltd., which supplies 95 percent of South Africa’s power, increased average prices by about a quarter this year.
--Editors: Ana Monteiro, Alex Devine
To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
