Implats tanks despite profit jump

Impala Platinum's Rustenburg mine. (Photo: File, Bloomberg)
Impala Platinum's Rustenburg mine. (Photo: File, Bloomberg)

Impala Platinum, which saw its share price jump 220% over the past year thanks largely to a monster rally in palladium prices, expects its headline earnings to increase by between 42% and 62% for the six months to end-December 2019, compared to the same period last year.

Its headline earnings are expected to be between R3.160 billion and R3.600 billion.

While Implats’ gross profit was 90% higher at R6 billion thanks to higher palladium and platinum prices, this was lowered by a once-off expensive of R509 million related to a bond transaction as well as restructuring costs of R238 million and a higher tax charges due to its improved profitability.

The palladium price has almost doubled in the past year, as demand has consistently outstripped supply.

As countries around the world tighten their emission rules for vehicles, so the demand for palladium has increased. Palladium has special qualities which allows it to help turn toxic gases into water vapour and other less-dangerous gases. Almost 90% of palladium is used in vehicle exhausts to help reduce emissions from cars.

The company also saw lower sales volumes due to the impact of ongoing planned smelter maintenance on refined production.

Implats will release its results on February 27th. Its share price took a hit after the trading update was released, and by late morning on Thursday was trading 8% lower at R138.46.

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