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- Sibanye Stillwater has cut its dividend by more than half in for the six months to end-June, hit by production issues, notably in the US, and lower PGM prices.
- The group now has a small net debt pile, even though its SA gold operations saw a significant turnaround after being hit by a protracted strike in 2022.
- But the group says the load shedding picture in SA appears to be improving, while it's also confident in its diversification and robust financial position.
- For more financial news, go to the News24 Business front page.
Mining group Sibanye Stillwater said on Tuesday it swung into a small net debt position in its half-year to end-June - also more than halving its interim dividend - after it was hit by production issues in the US, social unrest in France, and a downturn in certain metal prices.
Profit fell 37% to R7.8 billion to end-June, the group said, with slowing global growth prompting a significant decline in commodity prices other than gold, while it also faced a slump in underground US PGM production after a shaft incident at its Stillwater West mine.
This shaft has since been repaired, it said, improving its second half outlook, but in late afternoon trade the group's shares had crashed 11%, bringing its year-to-date losses to 39%.
READ | Shaft incident to hit Sibanye US production
The group, now valued at about R81 billion on the JSE, cut its interim dividend almost 62% to 53c per share, while it also reported a net debt of R262 million, from net cash of R5.85 billion previously. Adjusted core profit, a measure of underlying profitability, also fell about 37% to R14.1 billion.
A weaker rand pushed up its dollar-denominated debt, with the company's capital expenditure also picking up almost a quarter to R3.2 billion. US underground PGM production fell about a tenth to 205 513 ounces, with core profit in this part of the business slumping by just over three quarters to R976 million.
Sibanye said its SA PGM operations delivered a "solid operational performance" despite load curtailment, with production of the basket of four metals it produces, excluding third-party purchases, falling 3% to 799 182 ounces. The operations "commendably managed" load curtailment and had also made significant progress in addressing cable theft in the second half of 2023.
"The SA PGM operations continue to move down the industry cost curves through consistent, leading cost management," it said. "In so doing, they have not only increased their relative profitability and competitiveness, but also ensured greater margin protection than higher cost peers against lower PGM prices." Adjusted core profit still fell 44% to about R11.8 billion amid lower prices.
Production from the managed SA gold operations surged 233% to 334 721 ounces, reflecting a bounce-back effect from a protracted strike in the prior year, contributing R1.4 billion to core profit rather than a R3.9 billion loss.
READ | Strike ends as Sibanye and gold miners reach settlement
Along with PGMs and gold, Sibanye also produces and refines iridium and ruthenium, nickel, chrome, copper and cobalt. The group has recently begun to build and diversify its asset portfolio into battery-metals mining and processing - such as copper or lithium.
Nickel production at its Sandouville refinery in France also fell almost a quarter, hit by 50 production days of downtime due to equipment failure at the electro-winning circuit, supply chain constraints leading to a shortage of critical inputs, and social unrest in France in the form of nationwide strikes. The group also cut its full-year guidance for this part of the business.
"The impacts of the precipitous decline in PGM prices and operational disruptions at our US and European regions, were cushioned by a significantly improved financial contribution from the SA gold operations," CEO Neal Froneman said in the results.
"While the global macro-economic outlook remains uncertain, central bank rate hiking cycles in many economies appear to have reached or are nearing their peaks, and there are positive signs that a recession may be avoided, although low growth conditions are expected to continue well into 2024.
"Global auto sales appear to be recovering, with recent forecasts for 2023 consistently being revised upwards," he said, adding that while this has yet to translate into a tangible increase in demand, an implied improvement in PGM demand during the second half would be supportive for spot PGM prices as destocking subsides.
A more positive narrative has also begun to emerge terms of improved power availability in SA, he said.
"A swift and decisive response from the private sector and general public in South Africa, following the lifting of regulatory thresholds on renewable projects for self-generation, has played a significant role in this, with over 4 000MW of private sector renewable energy estimated to have been installed in the last year."]
Update: This article has been updated to reflect Sibanye's share price reaction.
