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Anglo Platinum revives dividend after six-year pause

Mining company cuts net debt by 75%.

Anglo American Platinum declared its first dividend in six years after the world’s largest producer of the precious metal cut net debt by 75% from a year earlier and more than doubled annual profit.

The company, controlled by Anglo American, will pay R3.49 a share, resuming payouts halted in 2012 as it grappled with plunging prices for the metal. Operational improvements and cost cutting measures helped to boost earnings, the Johannesburg-based miner said. Asset sales also helped reduce net debt to R1.8 billion, a third consecutive annual decline.

“The hard work of the past five years has enabled us to today announce that we have reintroduced the dividend, establishing a pay-out ratio of 30% of headline earnings,” chief executive officer Chris Griffith said in the statement. “Anglo American Platinum is now a fundamentally different business, having restructured and repositioned the business.”

Amplats, as the company is known, has been selling and winding down older, less profitable operations as it seeks to cut costs and adjust to a lower price of platinum. The metal plunged more than 40% in the three years through 2015 and has traded relatively range-bound since. The miner has sold assets to Sibanye Gold, Lonmin and Northam Platinum.

So-called headline earnings, which exclude some one-time items, surged to R3.89 billion for the 12 months through December, compared with R1.87 billion a year earlier. 

Platinum is likely to be in a small surplus again in 2018, the company said. 

“Gross automotive demand may decline with diesel engines’ share of new car sales in Europe set to fall, albeit at a lower rate than last,” Amplats said. The outlook for the jewelry sector is mixed with a strong performance expected in India, while Chinese demand may weaken.

Amplats is focused on improving underlying cash flow and any project spending will focus on “quick return projects that generate meaningful incremental value,” it said. The miner won’t commit any major project capital this year.

Amplats shares gained 3.4% by 10:18 am in Johannesburg, rising for a sixth day.

© 2018 Bloomberg

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