Anglo American Platinum (Amplats) announced on Monday that it will distribute an additional cash dividend of $856 million ahead of its planned spinoff into a standalone unit. This decision comes despite a 40% decline in annual profit, which fell to approximately 8.4 billion rand (about $456.7 million) due to lower platinum-group metal (PGM) prices affecting earnings.
Key Highlights:
Dividend Details:
The 15.7 billion rand cash payout is in addition to a final dividend of 3 rand per share, amounting to around 800 million rand.
This additional dividend will be sourced from Amplats’ net cash reserves, which total approximately 17.6 billion rand.
Financial Stability:
CEO Craig Miller assured that the company can afford this extra payout without jeopardizing its liquidity.
CFO Sayurie Naidoo emphasized that all assets are cash-generative, and they expect to remain cash neutral by year-end.
Market Response:
Following the announcement, Amplats’ shares rose by as much as 3.8% in early trading.
Demand Outlook:
Miller noted that demand for PGMs is expected to persist, particularly from automakers, as the growth of battery electric vehicles—which do not utilize PGMs—slows.
The reduction in investments in new mines by South African PGMs may lead to tighter future supply.
Spinoff Plans:
The spinoff from Anglo American is scheduled for completion by June, as part of the company’s restructuring strategy following a $49 billion takeover bid from BHP last year.
Anglo American has also divested its coal assets and is in the process of selling its nickel business in Brazil, along with plans to divest its De Beers diamond unit.
Stake Retention:
Anglo will retain a 19.9% stake in the newly formed unit but will not have any representation on Amplats’ board.
This retention is expected to help manage potential “flowback issues” for the stock, particularly from passive index holders who may sell shares post-demerger.