Valterra Platinum (VAL) H1 2024 earnings summary

Executive summary

• Net revenue declined 19% year-over-year to R52.2 billion due to a 24% drop in the PGM basket price, partially offset by a 9% increase in sales volumes from inventory drawdown.

• Adjusted EBITDA fell 8% to R12.3 billion, with a mining EBITDA margin of 28% (down from 42%), reflecting lower prices, restructuring costs, and inflation, offset by cost savings.

• Headline earnings dropped 18% to R6.5 billion; interim dividend of R9.75/share declared, maintaining a 40% payout ratio.

• Net cash position at period end was R14.5 billion, with liquidity headroom of R37.4 billion.

• R4.7 billion in cost and capex savings delivered in H1, on track for R10 billion annual target.

Financial highlights

• Gross profit margin improved to 22% (up 5pp), while cost of sales decreased 24% to R40.9 billion.

• Cash operating costs per PGM ounce rose 1% to R18,280, but AISC fell 19% to US$957 per 3E ounce, well below the US$1,050 target.

• Return on capital employed (ROCE) was 20%, down from 30% year-over-year.

• Sustaining capital expenditure was R7.0 billion, with total capex at R8.6 billion.

• Attributable economic free cash flow was R7.7 billion, down 46% year-over-year.

Outlook and guidance

• 2024 production guidance unchanged: total M&C PGM production of 3.3–3.7 Moz, own-mine production 2.1–2.3 Moz, POC 1.2–1.4 Moz.

• Refined production guidance at 3.3–3.7 Moz; unit cost guidance R16,500–R17,500 per PGM ounce; AISC target below US$1,050/3E oz.

• Capital expenditure for 2024 expected at R19.0–R19.5 billion, focused on asset integrity and Der Brochen project.

• Demerger from Anglo American targeted by end of 2025, aiming for a focused, independent PGM leader.

• Full-year cost and capital savings program on track, with R4.7 billion realized in H1 and full implementation expected by year-end.