Amplats trading update sucks, points to loss for FY 2012

It is however quite hard to be an optimist when you look at the trading statement released by Amplats this morning however. This is for the year to end December 2012, a year that was the worst for miners in terms of labour relations for as long as many can remember. Sis. I am going to copy and paste the Trading Statement: "Headline earnings per share ("HEPS") for the period is expected to decrease to a loss of between 491 cents and 628 cents from a profit of 1,365 cents reported for the year ended 31 December 2011."


It gets worse, because the company are using this as an opportunity and perhaps this is a sign of what will come with the operational review: "Basic earnings for the period includes losses of R463million resulting from the revaluation of certain investments and R6,606 million (after-tax R4,756 million) for the write down in the carrying value of various projects and other assets, not in use, that are considered not economically viable in the current market environment."


So, that means "Basic earnings per share for the period is expected to decrease to a loss of between 2,487 cents and 2,624 cents from a profit of 1,374 cents for the comparative period."


This is a shock, but not a big one, there were certain expectations that these were going to look ugly. Well, the write down is something that will no doubt be fleshed out in the results, but the operational review (which is late I guess, but perhaps that is as a result of that review timeline coinciding with Cynthia Carroll resigning, too much happening) should reveal the real weighty issues facing the company. Read those lines: "The losses in production resulted in an increase in unit cash operating cost in 2012, due to the retained fixed cost base which further negatively impacted on HEPS for the period." 306 thousand ounces of lost production, according to Amplats. Which is 4.365 billion Rands of lost revenue at a current platinum price of 1634 Dollars per ounce, and 8.73 Rands to one Dollar. Wow, that is a huge number....... Lost export revenue. Costs are too high. I am expecting the long knives to be sharpened at 55 Marshall Street. Which does not really bode well for job creation in South Africa. Expect the full results, as per the announcement three weeks today.