Following last year's industrial unrest at its South African platinum operations, Lonmin's (LMI) half-year figures beat analysts' expectations. Indeed, a $90m (£58.4m) first-half operating profit marked a robust improvement on 2012's $702m full-year loss - when most strike-related costs hit. It was also well ahead of 2012's $14m first-half operating profit. That said, mid-year wage talks with unions could prove challenging.
Operationally, production of platinum concentrate - at 366,059 ounces (oz) - was in line with Lonmin's renewal plan and management boosted full-year production guidance by 3 per cent to at least 700,000 oz. First-half sales rose 2.4 per cent to 326,142 oz, too, and - despite recently reported smelter outages - expected sales guidance for 2013 was maintained at 660,000 oz. Moreover, a relatively modest 5.8 per cent unit cost increase enabled Lonmin to reduce its full-year unit cost growth estimate from 10 per cent to below 8 per cent - against a five-year annual industry average of 14 per cent. Expected deficits in global platinum markets over the next few years leave prospects looking more favourable, too - although physical inventories could take another year to clear.
UBS expects adjusted full-year EPS of 7.72¢ (from 3.94¢ in 2012).
| LONMIN (LMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 294p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 294-295p | 12-MONTH HIGH: | 475p | LOW: 227p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 582¢ | NET CASH: | $194m | |
| Half-year to 31 March | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 751 | 18 | -6.3 | nil |
| 2013 | 735 | 54 | 13.3 | nil |
| % change | -2 | 200 | - | - |
| £1=$1.54 | ||||
