Anglo American Platinum Limited ('Anglo American Platinum' or 'the Company') today reported results for the twelve months ended 31 December 2015.
Key Features:
- All operations cash positive
- R4 billion of free cash flow generated from operations
- Net debt reduced to R12.8 billion from R14.6 billion
- Earnings significantly impacted by one-off impairments and restructuring
MANAGING THE BUSINESS FOR THE LOW PGM PRICE ENVIRONMENT
The platinum market has been in deficit, with an estimated 700koz platinum deficit in 2015. However, despite this deficit, global macro-economic factors impacted sentiment, and led to the dollar price of platinum falling by 27% during 2015.
Commented CEO Chris Griffith: “In this low PGM price environment we have managed the business for the current prices and ensured all operations remained cash flow positive, by improving our operational performance and efficiencies; reducing costs and capital expenditure; and cutting out unprofitable ounces. In 2015, all our operations remained cash flow positive, generating R4.0 billion in free cash.”
Much improved underlying operational performance
Anglo American Platinum had a strong recovery in platinum production in 2015, with 2014 being materially impacted by the five-month industrial action and associated production ramp up. Total platinum production was up 25% year-on-year due to strong operational performances at Amandelbult and Unki mines, as well as a record performance from Mogalakwena. The Company had improved performances at Rustenburg and Union mines, as they benefitted from an increased focus on operational efficiency.
Total refined platinum production of 2.46 million ounces was up 30% year-on-year, which was made up by platinum production of 2,33 million ounces; supplemented by a drawdown in pipeline inventory of 130,000 ounces. The increased refined production led to an increase in platinum sales, up 17% year-on-year, to 2.47 million platinum ounces.
As a result of this strong operational performance and the focus on costs and efficiencies, every one of the Company’s operations was cash positive in 2015, generating free cash flow of R4 billion. This enabled the Company to reduce its net debt position to R12.8 billion from R14.6 billion, thereby enabling it to maintain a robust balance sheet with plenty of liquidity headroom.
EBIT, after adjusting for the impairment and scrapping of assets, increased to R3.6 billion from R1.2 billion primarily due to the improvement in operational performance following the protected industrial action in the comparative period; an increase in sales volumes; and weakening of the South African Rand versus the US dollar.
The Company continues to focus on managing costs, and its cash operating cost per platinum ounce was R19,266 a reduction of 15% compared to R22,574 in 2014. On a normalized, or strike adjusted basis, the 2015 unit cost increased by 6%, which was below mining inflation.
Headline earnings decreased to R107 million from R786 million in 2015, due to the sharp dollar PGM price declines as well as one-off restructuring costs of R900 million and impairments. The company recorded impairments totalling R14 billion, with R1.8 billion impacting headline earnings. Excluding these one-off items, headline earnings increased to R2.7 billion or 452 cents per share, a 50% increase year-on-year.
Discover more information in our Annual Results Booklet.