Anglo Platinum share prices rises despite soft interim results

Key Takeaways from Anglo American Platinum's 2023 Interim Results:

1. Declining Prices: The average dollar basket price per PGM (Platinum Group Metals) ounce sold decreased by 29% in H1 2023 compared to H1 2022. Similarly, the rand basket price per PGM ounce sold dropped by 15% during the same period.

2. Decreased Revenue and Earnings: The company's revenue in H1 2023 decreased by 24% compared to the previous year, resulting in a decline in basic earnings and headline earnings of 71%.

3. Lower EBITDA and Margin: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for H1 2023 decreased by 69% compared to H1 2022.

4. Reduced Dividends: The dividend per share decreased by 85% from H1 2022 to H1 2023.

5. Declining Return on Capital Employed: The return on capital employed (ROCE) decreased by a significant 120 percentage points, falling from 150% in H1 2022 to 30% in H1 2023.

The mining EBITDA margin dropped by 17 percentage points, indicating reduced profitability and operational efficiency for the company's mining activities. This reduction in profitability can be attributed to the decrease in PGM prices and the increased costs of mining operations.

Basic earnings of R7.7 billion and headline earnings of R7.9 billion, both showed a 71% decrease from H1 2022. The company's net cash position stood at R23.9 billion, a decrease of 43% from the previous year.

Despite these setbacks, Anglo American Platinum continues to reward its shareholders by declaring a dividend per share of R12.00, although this represents an 85% decrease from the previous year.

The company's ROCE (Return on Capital Employed), a key indicator of profitability and efficiency, stood at 30%, a sharp decrease from 150% in the previous year. The decline in ROCE indicates a lower efficiency in utilizing capital to generate profits and a potential decrease in the company's overall financial performance.

Overall, Anglo American Platinum's 2023 interim results reflect a challenging period with declining prices, reduced revenue and earnings, lower EBITDA and margin, decreased dividends, and a significant drop in the return on capital employed.

The share price of Amplats has however opened higher following the results announcement. Initial gains (whether they sustained or not) suggest markets were conditioned for the for the drop in earnings through the trading statement released by the company on the 17^th of July 2023.

Broker ratings

A Refinitiv poll of analyst and broker ratings for the company, as of the 24^th of July 2023 arrive at a long-term consensus ‘hold’ for the stock.