Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anglo American Platinum Ltd (AGPPF, Financial) delivered a resilient financial performance with an EBITDA of ZAR12 billion and a mining margin of 28% despite lower PGM prices.
- The company achieved significant cost savings, realizing ZAR4.7 billion in the first half of the year, with a ZAR5 billion cost-saving program for 2024.
- Refined PGM production increased by 5% to 1.78 million ounces, and sales volumes rose by 9% to 1.97 million ounces due to inventory drawdown.
- The company maintained a strong balance sheet with net cash of ZAR15 billion and declared an interim dividend of ZAR2.6 billion, representing a 40% payout of headline earnings.
- Operational excellence initiatives are ensuring that the company is on track to deliver on its full-year guidance, with positive momentum gained in the second quarter of the year.
Negative Points
- Total PGM production was down 5% compared to the prior period, indicating challenges in maintaining production levels.
- The company faced significant cost pressures and geopolitical tensions, requiring decisive actions to ensure long-term sustainability.
- The tragic loss of two colleagues at the Amandelbult mine in June highlighted ongoing safety challenges, despite efforts to improve safety protocols.
- Revenue generated was ZAR52 billion, a 19% drop compared to the comparative period, primarily due to a 24% decrease in the PGM basket price.
- The Mogalakwena North Concentrator experienced an electrical failure, which is expected to have a 5% impact on Mogalakwena's metal and concentrate production in 2024.
Q & A Highlights
Q: What aspects of your business are reliant on Anglo American that you would need to factor into your strategic imperatives as you break away?
A: We have commenced the demerger process with two work streams: one focused on the demerger itself and the other on the stand-alone separation. We are identifying areas of overlap, such as IT and supply chain, and will have arrangements in place by the end of this year. We expect to have completed the process in 2025. (Craig Miller, CEO)
Q: Is there any impact on the dividend going forward with the demerger?
A: We will maintain our balanced and disciplined capital allocation framework. The dividend is a key differentiator for us, and we paid out 40% of headline earnings. We will re-evaluate our dividend at each reporting period. (Sayurie Naidoo, Acting CFO)
Q: How do you see the strategy changing when you emerge as a stand-alone company?
A: Our primary focus will be on extracting the most value from our PGM assets. We will invest our capital back into the PGM business in a disciplined way, ensuring appropriate returns and balancing investment with shareholder returns. (Craig Miller, CEO)
Q: Will there be a long-term impact from your revised stripping regime and mine plan at Mogalakwena?
A: The optimization of the Mogalakwena pit allows us to reduce waste removal, improving cash flow and efficiencies. This will not result in a significant step-up in waste removal in the future. (Craig Miller, CEO)
Q: Can you provide more details on the cost savings target for the second half of the year?
A: We will maintain the H1 run rate and deliver further cost savings from the operational restructuring. We expect to see about ZAR600 million in labor reduction benefits in the second half. (Sayurie Naidoo, Acting CFO)
Q: Will the demerger result in a name change for the company?
A: Our current focus is on ensuring a successful demerger and separation. We will address potential name changes in due course. (Craig Miller, CEO)
Q: What are you seeing in terms of Chinese-made vehicle loading?
A: Loadings in China appear to be flat, with slightly lower loadings compared to European vehicles due to lower cold start requirements. We are not seeing significant thrifting in PHEVs. (Hilton Ingram, Executive Head - Marketing, PGMs)
Q: Can you provide an update on the safety incident at Dishaba and its impact on production?
A: The incident involved two fatalities due to a fall down an ore pass. We have implemented safety stoppages and Section 54 measures, which will have about a 5% impact on Amandelbult production. We remain confident in meeting our full-year production guidance. (Craig Miller, CEO)
Q: Will the dividend policy remain the same post-demerger?
A: We will assess any changes needed as an independent entity, but the key principles of balancing investment in the business with returning cash to shareholders will remain. (Sayurie Naidoo, Acting CFO)
Q: What are the options to manage potential flowback from the demerger?
A: We are working with Anglo American to evaluate options, including a secondary listing in London. Our focus is on highlighting the investment case for Anglo American Platinum as a stand-alone entity. (Craig Miller, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
