African Rainbow Minerals Limited Anticipates Significant Earnings Decline in 1H F2024

  • ARM expects headline earnings to drop by 40% to 50% in 1H F2024 compared to the previous period.
  • Basic earnings are forecasted to decline by 70% to 80%, with impairments contributing to the downturn.
  • Factors such as lower commodity prices and impairments have impacted ARM's financial performance.
Published by
Lethabo Ntsoane

African Rainbow Minerals Limited (ARM) has issued a trading statement projecting a substantial decrease in earnings for the first half of the financial year 2024 (1H F2024). The mining company, listed on the Johannesburg Stock Exchange (JSE), foresees a decline in headline earnings and basic earnings by significant margins compared to the corresponding period in 2023.

Financial Metric1H F2024 Expectation1H F2023
Headline EarningsDecrease of 40% – 50%R5,172 million restated¹
Basic EarningsDecrease of 70% – 80%R4,388 million restated¹
Headline Earnings per Share1,319 cents – 1,583 cents2,639 cents restated¹
Basic Earnings per Share448 cents – 671 cents2,239 cents restated¹

Factors Impacting Performance:

ARM attributes the projected decline in earnings to several key factors affecting the mining industry. A significant drop in average US Dollar 6E PGM (platinum group metals) basket prices, coupled with lower thermal coal prices, has notably impacted the company’s revenue stream. These declines were partially mitigated by a weaker average rand/US Dollar exchange rate and higher average realized export iron ore prices.

Impairments:

The company’s basic earnings for 1H F2024 are further affected by impairments of property, plant, and equipment across various operations. After tax, on an attributable basis, the impairments include:

  • Two Rivers: R1,070 million
  • Modikwa: R376 million
  • Beeshoek Mine: R288 million
  • Cato Ridge Works: R5 million

Financial Reporting:

The financial information forming the basis of this trading statement has not been reviewed or reported on by ARM’s external auditors. The company is scheduled to release its 1H F2024 financial results on 8 March 2024.

Conclusion:

The projected earnings decline for the first half of the financial year 2024 underscores the challenges faced by ARM amidst fluctuating commodity prices and economic uncertainties. The company remains focused on navigating these challenges while maintaining its commitment to shareholders and stakeholders.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo