Royal Bafokeng Platinum delivers blowout quarter supported by strong metal prices

PUBLISHED: Wed, 04 Aug 2021 07:49:34 GMT
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    Royal Bafokeng Platinum reported a 446 per cent jump in headline earnings per share, for the six months ended June. The company’s earnings were supported by strong metal prices and growth in the business. Royal Bafokeng Platinum CEO, Steve Phiri spoke to CNBC Africa’s Zinathi Gquma.

    Full interview transcript below:

    Steve Phiri  00:00

    Yes, thanks. Thanks very much. Well, really, it’s, it’s amazing isn’t it that you come with a set of results, and the market seems not to like the results. But the last thing as a CEO and as management is to try to read the market, especially the performance of the share price on a particular day, because then you become an analyst, and you start speculating what the reasons are, when the positives are there to judge and the negatives are hidden somewhere. So I really don’t know. However, with the few people that have spoken to me as a data magnet, they expected us to pay 100% of free cash flow, just like our pure Anglo Platinum date. So for me, I’m not disappointed Actually, I’m excited that a small company like ours, is be packed in the same bracket as Anglo platinum. And therefore, we are expected to punch above our weight, and we’re up for a challenge. But there is nothing negative about the results, nothing negative about what we paid. We paid 50% of free cash flows. And we sitting again, on on a on an ice by far this is an intern was out. And we already said that we paying an interim result, I mean dividend and on a full year basis that will be reviewed, so that it reflects a full year dividend itself. So if somebody pays 100%, I don’t need to pay 100%. Each company differs from another based on the circumstances and what faces the company going forward. But the fundamentals in the business are quite strong. And we look forward to even stronger second half of the year, even a better dividend for the full year.

    Zinathi Gquma  01:45

    You talk about not punching above your weight as the millennials and Gen Z does say, stay in your lane. But just looking at that.

    Steve Phiri  01:56

    We are trying to punch above our weight and we enjoy this punching above our weight because it’s good to be compared with the best. You don’t want to be the best amongst the poor. Yeah.

    Zinathi Gquma  02:10

    And just looking at that interim dividend that you paid 1.5 billion Rand made an interim dividend. I mean, What message does this send to your shareholders about future returns?

    Steve Phiri  02:24

    Well, the message should say like our full year dividend in March this year, the message is say this company is on an upward trajectory, there is stability coming through, and they can look forward to good performing sustainable business so far as dividends is a concern. So it’s investable very much. So,

    Zinathi Gquma  02:47

    of course, as expected from a platinum mining company, those earnings largely driven by the higher PGM prices. We have seen recently those PGM prices pulling back a bit. In your view, do you think that that’s a temporary move? Or could we see a more permanent pullback in those PGM prices?

    Steve Phiri  03:09

    While we did know that these prices will pull back, but to what extent do they pull back? And what what is the danger zone of pulling back at this stage, the prices are still good, there’s still a very big room for a very big margin. And, and the name of the game now is to control the cost and remain profitable. And even at this level, even lower levels will remain profitable. Yeah. But those big tries not stay forever at those levels.

    Zinathi Gquma  03:41

    Yeah. And in that scenario, where those prices do pull back on a more permanent basis, how are you going to make sure that you keep the momentum into the future? Our market analyst actually did note the high the high jump in your EBITDA. And he was also concerned or he was asking if you can keep this momentum going into the second half of the financial year.

    Steve Phiri  04:09

    Yeah, through operational efficiencies, and we are working quite hard on operational efficiency efficiencies, so that we keep healthy margins and we can live with even lower prices, any business that does not survive in poor pricing environment, it does not belong to be in that in that sector itself. So if you can survive poor operating and pricing environment, then you will thrive in in in good times to come. And we have proven that even in the past when prices were so low, and we are building a project of 13 billion plus we survived and that’s where we are now and we are ramping up into a very good, good pricing environment. So yeah, you have to survive in bad times.

    Read: Anglo American pays out record $4.1 bln to shareholders for first half

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