JOHANNESBURG, Feb 17 (Reuters) – Anglo American Platinum will pay an additional $856 million cash dividend ahead of its planned spinoff into a standalone unit, it said on Monday.
The payout is despite annual profit slumping 40% to about 8.4 billion rand ($456.7 million) as lower platinum-group metal (PGM) prices continue to squeeze earnings.
Johannesburg-based Amplats said the 15.7 billion rand cash payout is in addition to a final dividend of 3 rand per share, or about 800 million rand, ahead of its plan to demerge from parent company Anglo American.
Amplats will pay the additional dividend from its net cash reserves of about 17.6 billion rand, CEO Craig Miller said on a call with journalists.
CFO Sayurie Naidoo added that the company can afford the extra payout without compromising its liquidity position.
“All our assets are cash generative and therefore we expect by the end of the year we will still be in a cash neutral position,” she said.
The miner’s shares rose as much as 3.8% in early morning trading.
“We have modelled this on various price scenarios and we still believe we will be able to execute on our strategy.” Naidoo said.
Amplats would continue to benefit from demand for PGMs mostly from automakers, as the rollout of battery electric vehicles, which do not use the metals, slows down, Miller said. South African PGMs have also scaled back investing in new mines, which could result in future supply tightening, Miller said.
“There will be continued demand for our metals and through the assets we have we will be able to supply into that,” Miller said.
The platinum miner is due to be spun off from the London-listed group by June, part of a restructuring strategy implemented by Anglo American after fighting off a $49 billion takeover bid from bigger rival BHP last year.
Anglo has also sold its coal assets and is in the process of selling its nickel business in Brazil. It also plans to divest its De Beers diamond unit.
Anglo will maintain a 19.9% stake in the demerged unit and gradually manage its exit over time, but will have no presence on the Amplats board, it said.
Retaining the stake could also help manage “flowback issues”, RBC Capital market analysts said.
“This should help with the possible flowback issues on the stock, particularly from passive index holders of Anglo American that would mechanically be selling the shares post demerger,” the analysts said.
($1 = 18.3938 rand)
(Reporting by Felix Njini and Nelson Banya; Additional reporting by Clara Denina, Editing by Tom Hogue and Christian Schmollinger, Kirsten Donovan and Sharon Singleton)
