Despite palladium’s price strength, chrome and platinum group metal producer Tharisa (THS) has seen its earnings crash in 2019.
A combination of falling production and weaker chrome prices led to a 16 per cent drop in revenues to $343m (£265m). This, combined with higher capital expenditure, cut free cash flow by almost half, to $26m. The dividend has suffered accordingly – the total 2019 payout is less than 20 per cent of last year’s, at 75¢.
The reason for these poor returns is Tharisa’s ‘Vision 2020’ growth project, which includes a reworking of the open pit and a revamp of the mining fleet, on which it spent $28m in FY2019.
The aim is to get to 2m tonnes a year of chrome concentrate and 200,000 ounces (oz) a year of platinum group metals.
The 2019 production numbers show there is still some way to go. In the 12 months to 30 September, Tharisa produced 140,000 oz of platinum group metals (PGMs) and 1.29mt of chrome concentrate. Investors across its dual London and Johannesburg listings reacted strongly to the profit warning issued last week – Tharisa lost a fifth of its value, its London shares falling to 81p immediately and then coming down further in the following days.
Consensus estimates compiled by Bloomberg see earnings per share recovering from 4¢ in 2019 to 16.9¢ in March 2020 and 28.6¢ in FY2021.
| THARISA (THS) | ||||
| ORD PRICE: | 75p | MARKET VALUE: | £201m | |
| TOUCH: | 73-76p | 12-MONTH HIGH: | 122p | LOW: 74p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 107¢ | NET DEBT: | 25% | |
| Year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2015* | 247 | 9.6 | 2.0 | nil |
| 2016 | 220 | 22.0 | 5.0 | 1.0 |
| 2017 | 349 | 91.0 | 22.0 | 5.0 |
| 2018 | 406 | 65.0 | 19.0 | 4.0 |
| 2019 | 343 | 11.2 | 4.0 | 0.75 |
| % change | -16 | +83 | -79 | -81 |
| Ex-div: | tbc | |||
| Payment: | tbc | |||
| £1=$1.29, *Prior to London listing | ||||
