Major price pain for Implats

Impala Platinum’s (Implats) profitability has remained challenged by a lacklustre rand, and platinum group metal (PGM) pricing.

In its financial results for the six months ended December 2024, Implats said that its performance benefitted from a group-wide labour restructuring and adjustments to certain operating parameters.

The group said both measures were in response to continued low pricing for PGMs, which also hit Sibayne-Stillwater and Anglo American Platinum.

The group said that its strong operational delivery, higher sales volumes and cost containment were negated by lower revenue.

Despite a drop in earnings, the group said that its free cash flow generation improved, and the group maintained a strong and flexible balance sheet.

The group’s revenue declined by 3% to R42.3 billion, while the cost of sales was stable at R40.2 billion. This means that the group’s gross profit was R2.1 billion.

It is important to note that the group’s gross profit still declined by 38% from the prior comparable period.

However, two once-off impairments in the prior year meant that profit for the period actually increased by 6.5% to R1.8 billion.

Overall, basic earnings increased from R1.6 billion to R1.9 billion. However, headline earnings dropped by 43% to R1.85 billion.

The group also recorded a free cash inflow of R639 million following net cash capital outflows of R3.8 billion. It ended the period with adjusted net cash after debt of R6.7 billion.

Implats’ capital allocation framework aims to sustain and grow meaningful value for all stakeholders and provide attractive returns to shareholders while maintaining the group’s financial flexibility.

The group said its dividend policy is premised on returning a minimum of 30% of adjusted free cash flow, pre-growth capital and cash outflows.

That said, due to constrained cash flow resulting from low PGM prices, the macroeconomic environment, and elevated working capital requirements, the group has not declared an interim dividend.

The group’s board will reassess a dividend declaration at year’s end. The financial results for the period can be found below:

Outlook

The group said that at the start of 2025, global markets renewed their bets on a stronger-for-longer US dollar and higher-for-longer interest rates as the US growth outlook improved.

With the world waiting for US policies under the Trump administration to unfold, the group policymakers and central banks are being challenged to operate in an uncertain environment.

It added that the potential impact of tariffs, geopolitical tensions and divergent growth outlooks continue to present downside risks to the global macroeconomic outlook.

“Anecdotal evidence indicates that destocking by automotive and industrial end-users of PGMs is slowing. Implats continues to receive robust requests for spot material from our customer base.”

“In addition, a continued deferral of the expected recovery in recycling flows and secondary supply is tightening near-term market outlooks for each of platinum, palladium and rhodium,” said the group.

“Despite these price-supportive developments, both business and investor confidence and dollar pricing remain anaemic, with a lack of conviction in the underlying demand outlook.”