Anglo American Platinum, a South African company (Amplats), is facing significant financial challenges and still pursuing its ambitious restructuring plan.
According to its CEO, the company plans to list a secondary company in London next year, after completing its demerger with its parent, London-listed Anglo American.
Amplats’ first-half report revealed that the company had also reduced its workforce by approximately 3,700 employees to reduce costs and prepare for the demerger.
Multiple factors are responsible for the sharp drop in earnings
Amplats has reported that the EBITDA (earnings before interest, taxes, depreciation and amortization) for the six-month period ending 30 June decreased by 8%, to R12.3billion (PS516m).
The headline earnings fell by 18% to R6.5 billion (PS273 millions).
The decline in earnings can be attributed to a number of factors, including inflation, one-off reorganization costs, and the significant drop in dollar basket prices for platinum group metals, which dropped by 24% to $1,442 ($1,121 PS).
Cuts in employment and cost-saving measures
Amplats announced in February a number of cost-cutting initiatives aimed at saving R10 Billion (PS420 Million) annually by the year’s end.
The company has already saved R4.7 billion (PS197 millions). Amplats is reorganizing its workforce and will cut 3,700 positions as part of the restructuring.
The company has lost approximately 2,800 workers to date.
The company also considers other strategic moves including a possible secondary listing in London.
Mixed results in sales and production
The company saw a 5% rise in its refined PGM production to reach 1.78 million ounces. However, the metal-inconcentrate production dropped by 5%, falling to 1.76 millions ounces.
The drawdown of inventories was the primary reason for the 9% increase in sales.
Craig Miller, Chief Executive of the company, stressed that it was focused on increasing productivity and maintaining operational excellence despite challenging economic conditions. He said,
As we navigate an ever-changing operating environment, we continue to focus our attention on our strategic goal of moving beyond resilience and thriving through change.
Anglo American Platinum: Future Outlook
Anglo American is expected to distribute its controlling interest in Amplats to its shareholders by 2025.
Miller stated that the company will consider a secondary listing in London after the separation from Anglo American has been completed.
Amplats currently is listed on the Johannesburg Stock Exchange, and Anglo American holds 78% of its shares.
It is crucial that the company maintains operational excellence and increases productivity in spite of low PGM prices, and despite challenging economic conditions. This will help it achieve independence and long-term growth.
Amplats has taken significant cost-savings measures, made strategic reductions in the workforce, and is considering a secondary listing in London. This will allow it to continue to grow as an independent company despite its current financial difficulties. The company will continue to focus on strategic priorities and operational excellence as it navigates the changing market landscape.
This post Amplats to demerge from Anglo American by 2025, but cuts 3,700 jobs in order to cut costs may be updated as new information becomes available
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