UPDATE: Impala Platinum 1st Half Net Up 13%; Cuts Capex Plans

Impala Platinum Holdings Ltd. (IMP.JO), the world's second-largest producer of the metal, Thursday said it has cut its capital expenditure plans to a third and is trimming operating spending on an ongoing basis to ensure each ounce produced is profitable.

The Johannesburg-based company also was cautious on the outlook for 2009, despite having posted a 13% rise in net profit for the six months to the end of December as a weaker rand to the dollar offset sharp falls in platinum group metals prices.

"With world economies and their financial systems still on life support, it is increasingly difficult to forecast the outcome for 2009," Implats said. "Suffice to say we do not expect any major recovery in automotive demand."

Platinum during the course of 2008 hit a record high, only to fall rapidly to five-year lows as demand from the key automotive industry slumped amid the global economic crisis. The fall in the price of the metal undermined Implats' plans to acquire South Africa's Northam Platinum Ltd. (NHM.JO), as well as Xstrata PLC's (XTA.LN) bid for Lonmin PLC (LMI.LN).

Implats said it will defer long-lead projects, which will result in a lower outlay of about 10 billion rand ($983 million) versus previous plans to spend ZAR30 billion over five years.

Net profit rose to ZAR5.29 billion in the six months to the end of December from ZAR4.66 billion a year earlier, Implats said. Revenue for the period, however, declined to ZAR16.24 billion from ZAR16.32 billion due to a drop in sales volumes.

Dollar revenue per platinum ounce was 8.2% lower at $2,408 an ounce, with overall PGM prices 5.8% down for the period.

Implats, which mines platinum group metals on South Africa's Bushveld Complex and Zimbabwe's Great Dyke, said gross platinum production for the six months was almost 15% lower at 878,000 ounces.

The company's shares ended Wednesday at ZAR137.49, down almost 56% on a year earlier. Shares in Anglo Platinum Ltd. (AMS.JO), the world's biggest platinum producer, fell about 63% in the same period.

Implats on Nov. 20 said it had halted its share repurchase program, having at that point already spent ZAR723.8 million. It also said it would review capital expenditure, all its projects and opportunities for additional cost savings.

Capital expenditure for the first half of the fiscal year was ZAR3.9 billion, up from ZAR2.4 billion previously, with the bulk spent on the development of 16, 17 and 20 shafts at the Impala Platinum operation in South Africa.

Implats said it has decided to continue with the three shafts as well as the Phase 1 expansion project at majority-owned Zimbabwe-focused Zimplats Holdings Ltd. (ZIM.AU).

"The dire economic circumstances belie the more positive fundamentals for PGM's that we have often articulated," the company said. "However, we believe the confidence needed to restore the health of this market may prove elusive during the bulk of the year."

Company Web Site: www.implats.co.za

-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com

Zimplats (ASX:ZIM)
Historical Stock Chart
From Oct 2024 to Nov 2024