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PGMs boom powers Implats to bonanza profits

Declares a final dividend of R12 a share, taking its total dividend for the full year to R22 per share.
Implats CEO Nico Muller. Image: Supplied

The much-vaunted commodities boom, wherein the price of especially platinum group metals (PGMs) has surged over the past year in the wake of the initial Covid-19 global lockdowns, saw Johannesburg-based Implats become the latest mining group to report record profits on Thursday.

Publishing its latest results for the financial year ended June 30, 2021, Implats rewarded shareholders handsomely with an effective dividend for the full year totaling R22 a share.

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It declared a final or second-half dividend of R12 a share on Thursday, after paying out an interim dividend of R10 a share at the half-year to the end of December 2020.

Read:
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Implats reported full-year revenue of R129.6 billion, representing a surge of 86% or R59.7 billion, due to higher dollar metal prices realised.

“Higher rhodium [41% of revenue], palladium [31% of revenue] and platinum [17% of revenue] prices increased revenue by R32 billion, R8.9 billion and R3.4 billion, respectively,” the group noted in a media statement on its latest results.

“Boosted by a record rand PGM basket price, improved operational momentum and higher sales, Implats has posted a 125% increase in headline earnings to R36.4 billion or R46.35 per share,” it said.

Implats’s free cash flow consequently surged 166% to R38.3 billion.

The group said it allocated 70% of the free cash flow generated to shareholder returns, through repurchases of its rand-based convertible bond and paying out cash dividends.

It ended the financial year with R23.5 billion in cash net of debt, while consolidated group capex for the period came in at R6.4 billion.

“Implats harnessed the benefit of improved operational momentum and record rand pricing for our primary products to deliver stellar results,” group CEO Nico Muller reiterated.

“This performance is testament to the progress made in the strategic repositioning of Implats over the past several years, which has enabled us to leverage the windfall on pricing to strengthen the business, care for employees, reward investors and secure the future growth and sustainability of the business,” he added.

Read: Platinum mine tense after assassination of unionist

Aside from the record performance, Implats flagged a possibly muted outlook for platinum in the short term. However, this makes up less than a fifth of the group’s revenue.

“Pt [platinum] prospects remain muted in the near term, but [there is] growing momentum for development of [the] hydrogen economy,” it highlighted in its results statement.

Implats stressed the critical role South Africa plays in PGM supply market. The country is the largest producer of PGM globally.

Read: Is the commodity supercycle stalling?

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I do not understand why the sell off in mining companies.

They are looking very cheap, and that is all that works in South Africa. Good Rand hedge.

Financial companies have life insurance to pay for Covid-19 fatalities, Covid-19 Debt, looting debt and their shares go up.

Same for retailers, %25 of the stores are burnt to the ground and their share prices go up.

Mr market in action

Looks like the wrong kind of BOOM to me 🙂

They drop 3% 4% 5% daily even with record profits, and is applicable to all PGM(s).

Iron and Coal look the most stable compared to PGM(s)

I am also struggling to understand this sell off, if anything, at those P/E levels this share price should be up by more than 40% after those results, not to mention the outlook on PGMS are still very strong.

I’m left asking if I am missing something, regardless, in my opinion, a massive mid-long term opportunity for the passive retail investor.

End of comments.

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