9th Feb 2015 12:49
LONDON (Alliance News) - Anglo American Platinum Ltd, part of Anglo American PLC, Monday said headline earnings halved during 2014 due to the five-month mine strike in South Africa during the first half of the year, it said the platinum market looks set to improve in 2015.
For the year ended December 31, Anglo American Platinum said headline earnings, excluding one-off items, totalled ZAR786 million, down from ZAR1.45 billion in 2013. The company was hit by a five-month strike in the first half of the year, slightly offset by a "faster than expected ramp-up and strong operational improvements across the portfolio" in the second half of the year.
"Following the successful ramp-up, we saw underlying performance improvements across the whole portfolio in the fourth quarter, with a 12% improvement in production on a normalised basis compared to the comparable period last year," said Chris Griffith, chief executive of Anglo American Platinum.
Operating profit fell to ZAR843 million in 2014 from ZAR1.9 billion a year earlier.
Equivalent refined platinum production for 2014 was 1.84 million ounces, 21% lower than in 2013. This was mainly due to the industrial action and the successful consolidation of the Rustenburg and Union mines in South Africa in 2013. The restructuring of the mines is now largely complete, with the consolidation of Rustenburg from five mines into three and Union mine from two mines into one.
"Anglo American Platinum continues to make progress towards repositioning its portfolio of assets, which includes the disposal of non-core assets. The objective is to exit Union and Rustenburg mines in the most appropriate manner, whether separately or together, through either a sale or listing. Interested parties are currently undertaking due diligence on each of these assets and a decision on the mechanism for exit will be made in the first half of 2015," the company said.
"While the strike had a significant impact on the year, we navigated through this difficult period and are well positioned to deliver on our aspirations for the business," Griffith said.
Sales fell by 9% year-on-year to 2.1 million ounces of platinum group metals as the company said it drew down inventories to supplement production affected by the strike so it could ensure that all contractual obligations were met.
The miner said it generated ZAR7.9 billion in cash from its operations, which was up from the ZAR7.3 billion generated in 2013. The cash flows were used to pay tax of ZAR2.7 billion, fund capital expenditure of ZAR6.9 billion, contribute towards funding for the company's joint ventures, totalling ZAR546 million, and to settle ZAR497 million of interest to its debt providers during 2014.
The company said it achieved an average platinum price of USD1,386 per ounce. The price was impacted in the second-half of the year by macroeconomic factors and by the return of supply from strike affected mines, it said in a statement.
"Indications suggest that market fundamentals for platinum strengthened during the year, and we should see the price react to these fundamentals in 2015," said Anglo American Platinum.
"We continue with the implementation of our value-driven strategy, cost-eduction programmes and improve operating efficiencies. Our focus remains on the restructuring and repositioning of our portfolio. We have the high quality assets to enable us to do this, and a new capital optimisation programme to ensure we allocate our scarce capital to the highest potential assets and projects," said Griffith.
Anglo American shares were up 0.4% to 1,151.00 pence per share on Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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