Impala’s profit may slide 30%

Johannesburg - Impala Platinum, the world’s second-largest producer of the metal, said its first-half profit may drop by as much as 30 percent because of an asset writedown and a plunge in prices.

Impala expects earnings per share to be R0.29 to R0.35 in the six months ended December 31, or 15 percent to 30 percent lower than the same period a year earlier, the Johannesburg-based company said in a statement on Monday. The company will lower the value of part of a mine shaft that closed in December, it said, without giving a figure.

Read: Platinum producers tread lightly

The profit warning comes as the world’s top platinum miners, including Anglo American Platinum and Lonmin, see earnings squeezed by an almost 50 percent plunge in platinum prices in the past five years. China’s slowing economy has cut demand and stockpiles have been enough to satisfy consumption. The companies have responded by cutting thousands of jobs and closing shafts while delaying investment on future output.

The decline in profit is mainly due to lower prices of metals in rand, which where down 15 percent from a year earlier, the company said.

A weaker South African rand has given Impala some protection from the rout in metal prices. The currency fell 26 percent against the dollar in the past year. South Africa’s miners, including Impala, typically receive dollars for their output and pay expenses in rand.

Impala gained 0.7 percent to R35.50 per share by the 5pm close in Johannesburg, erasing earlier losses of as much as 4.5 percent. The shares are up 42 percent this year.

BLOOMBERG