Amplats profits up but warns of troubles ahead

 
Suzie Neuwirth
ANGLO American Platinum yesterday posted an 88 per cent increase in earnings per share in the first half of the year due to a weaker rand, but warned that the operating environment “remains difficult” looking ahead.

Amplats, as the platinum miner is known, said that reported headline earnings per share had risen to 5.14 rand (34p). The rand currency fell about 17 per cent during the period, a boon for Amplats and other South African exporters.

The company said that the first half of 2013 was characterised by the strikes and workforce unrest currently affecting all of South Africa’s mining industry, which “impacted production, unit costs and labour productivity”. Amplats is restructuring its operations as it battles loss-making mines and soaring costs.

“Retrenchments are ‘absolute last resort’ and [Amplats] will look to mitigate by redeploying staff and offering early retirement and voluntary separation packages,” said Ben Davis, mining analyst at Liberum Capital.

“At the same time as the restructuring they are trying to complete wage negotiations. Strike action could potentially be avoided, but only if they gave into the union demands of zero redundancies and massive wage hikes. We very much doubt this will be the case given the current shareholder pressure.”

Shares closed 1.7 per cent higher at 304 rand.