News / Industry

Monday 17 - 21 July 2017

CORPORATE NEWS

ArcelorMittal SA sank deeper into the red in the six months to June‚ as the steel producer buckled under the weight of unrelentingly low steel demand‚ rising input costs and a stronger rand. The headline loss for the review period widened to R1.61bn‚ from R458m in the year-earlier period‚ as the costs of imported coking coal and iron ore rose‚ dealing a further blow to the company‚ whose fortunes are closely tied to the performance of the economy.

 

Northam Platinum is the second major South African platinum producer to buy assets in the US platinum group metal industry‚ investing USD10.7m cash to acquire recycling group A-1 Specialised Services. Northam’s decision follows Sibanye Gold’s USD2.2bn cash purchase of Stillwater Mining‚ the largest US producer of platinum group metals from mines and its recycling business.

 

Gold Fields expects interim earnings to roughly halve in dollar terms‚ it said on Thursday. It also gave an estimate of its liability in a silicosis and tuberculosis class action suit. Gold Fields said the EPS for the six months to end-June would be 43%-57% lower than the 14 US cents reported a year ago‚ coming in at between 6c and 8c.

 

MTN’s share price fell 7% to R110.08 on Thursday morning after it said it expected to report on August 3 that HEPS for the six months to end-June would be between R2.10 and R2.30. MTN reported a headline loss of R2.71 in the matching period‚ and investors appear to have been hoping for a stronger rebound.

 

Anglo American resumed dividends six months earlier than planned‚ returning USD0.48/share to shareholders‚ as it cut debt below targeted levels‚ recorded a strong interim profit and cash flow‚ and signalled a return to growth. Anglo will make a decision next year about what to do with its SA investments in iron‚ coal and manganese‚ with much riding on the ANC’s leadership decision at the end of the year‚ and the state’s mining policies.

 

Liberty Holdings expects normalised HEPS to be 25%-35% lower for the six months to end-June compared with the year-earlier period‚ resulting in normalised HEPS of between 422.5c and 487.5c/ share‚ the group said on Wednesday.

 

Gemfields is expected to de-list from the LSE on Friday. Pallinghurst appealed for a minority of Gemfields shareholders who oppose the takeover to accept the offer immediately‚ as this would allow them to receive shares sooner than would be the case if a compulsory acquisition procedure were undertaken.

 

Kumba Iron Ore’s share price jumped 9% on Tuesday morning after it declared a R15.97 interim dividend‚ resuming returns to shareholders after a sharp increase in profits based on higher output and improved prices for its products. Kumba‚ SA’s largest iron ore producer and an Anglo American subsidiary‚ resumed its dividends after last paying them in 2015‚ said CEO Themba Mkhwanazi.

 

British American Tobacco complained of ‘the growth in illicit trade’ causing its SA cigarette sales and profits to decline. British American Tobacco (BAT) complained of “the growth in illicit trade” causing its South African cigarette sales and profits to decline. The group reported a 16% jump in revenue to £7.7bn‚ but after-tax profit declined by 14% to £2.3bn. BAT declared an interim dividend of 56.5p. BAT completed its acquisition of the 57.8% of Reynolds it did not already own on Tuesday.

 

Double-digit beer volume growth in SA helped Anheuser-Busch InBev offset declines in the US‚ Brazil and Columbia‚ SAB’s owner said in its first-half results statement on Thursday.  “Our beer revenues in SA grew by 13.4% in the June quarter driven by revenue per hectolitre growth of 2.4% and beer volume growth of 10.8% benefiting from the timing of Easter. In the first half of the 2017 financial year‚ revenue grew 9.7% with revenue per hectolitre growth of 5.1% and beer volume growth of 4.4%‚” AB InBev said.

 

Anglo American Platinum posted a chunky interim loss‚ as rand prices for its metals languish at 2013 levels and the company investigates ways to boost productivity and cut costs to cope with a difficult market — in which two-thirds of SA’s platinum production is loss-making. Amplats‚ which is 80% owned by Anglo American‚ has just one loss-making asset‚ the Amandelbult mine‚ and CEO Chris Griffith said the company had a plan to bring costs at the mine down by 25% in the next few years.

 

Intu Properties’ shares dropped just more than 4% in early trade on the JSE on Thursday‚ after it posted a drop in H1 rental income‚ and forecast zero growth in the H2. Releasing its results for the six months to June on Thursday‚ the company said like-for-like net rental income dropped 1.5% due to nonrecurring rental items in the first half of 2016‚ and the effect of the closure of British Home Stores. Underlying earnings for the period dropped to GBP98.5m‚ from GBP99.5m‚ reflecting the drop in net rental income.

 

AECI on Wednesday reported a 32% rise in HEPS to R3.86 after managing to keep a tight lid on costs. But group revenue declined 7% to R8.47bn in the six months to end-June‚ reflecting the effect of a stronger rand. A third of the group revenue was generated outside SA. The better performance came from its explosive division‚ which more than made up for the slack in the chemicals division.

 

Metair’s share price jumped 5.3% to R20 on Wednesday morning after it said it expected its interim earnings to more than double. Metair said it expected to report on August 17 that the HEPS for the six months to end-June grew between 105.6% and 114.8% from the matching period’s 54c.

 

Mediclinic International announced on Tuesday that CEO Danie Meintjes would retire in July 2018. Meintjes has been at the helm of the private hospital group since 2010‚ but his history with the company stretches back to 1985‚ when he first started as a hospital manager at Mediclinic Sandton. The company said a nomination committee would start the process of replacing Meintjes.

 

Long4Life’s raised bid for Holdsport announced on Tuesday morning appeared to have been too generous‚ with its share price falling 20% while Holdsport’s jumped 7%. Long4Life’s new bid for Holdsport was a choice between 12.1 of its shares for each Holdsport share or 11.2 shares plus R5 cash‚ the companies said in a joint statement on Tuesday morning. The cash offer is capped at R204m.

 

Food producer AVI grew its revenue 8.2% in the year to June‚ after increasing selling prices to mitigate the effect of a weaker rand‚ which inflated input costs. As a result‚ all business segments realised operating profit growth‚ the company said on Monday in a trading statement.

 

Cement maker PPC announced on Monday that CEO Darryll Castle had ‘agreed to part ways’‚ with immediate effect.  The MD of its South African operations‚ Johan Claassen‚ has taken over as interim CEO until a permanent appointment is made. Castle’s departure follows shortly after last Wednesday’s announcement that former Reserve Bank governor Tito Mboweni had resigned as an independent director on PPC’s board.

 

ECONOMIC NEWS

The Reserve Bank will not bow to any pressure‚ be it political or from the private sector‚ governor Lesetja Kganyago insisted on Friday at the Bank’s annual ordinary general meeting. Public Protector Busisiwe Mkhwebane made a recommendation that Parliament amend the Constitution to change the Bank’s mandate. Kganyago said the Bank would be heard on the matter in the high court next week. He said apart from the legality of the issue‚ and its relevance to the original complaint under investigation‚ “these developments have opened the door to a debate about the appropriateness of our mandate‚ and of the inflation-targeting mandate specifically”.

 

Eskom wants consumers to cough up more for electricity‚ but a lobby group has raised questions about how the power utility has spent hundreds of billions in funding. Eskom is seeking a 20% tariff increase from Nersa.  Nersa starts its public hearings on the proposed tariff increase in Pretoria on Thursday.

 

SA’s Chamber of Mines lodged an urgent application in the Pretoria High Court on Tuesday to stop Mineral Resources Minister Mosebenzi Zwane’s proposed restriction on granting new mining and prospecting rights applied for after July 19‚ citing the gazetted proposal as unlawful and beyond the minister’s powers.

 

The PIC believes there is a high probability of a further sovereign downgrade by credit ratings agencies due to the sluggish growth of the economy and the low level of confidence‚ which are hurting investment and consumer spending. The PIC‚ which has about R2-trillion under management‚ is the investment manager for the Government Employees Pension Fund‚ the Unemployment Insurance Fund and the Compensation Commission.

 

SAA made a request to the Treasury in March for a R10bn recapitalisation‚ Finance Minister Malusi Gigaba has disclosed. The request supports the assessment that the board of the state-owned airline made of its future funding requirements. The airline is dependent on a R19bn state guarantee to remain operational.

 

SA's 2017 commercial maize harvest is expected to be 2.16% higher than previously forecast in June — the largest maize crop to date in the country. In its sixth production estimate for the year‚ the crop estimates committee said on Wednesday the size of the maize crop had been set at 15.969-million tons in July.

 

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