South African billionaire Patrice Motsepe's ARM reports lower earnings and revenue as iron ore prices fall

African Rainbow Minerals (ARM) saw its profits and revenue fall by a single-digit percentage at the end of its 2022 fiscal year, as lower iron ore prices significantly impacted the group’s financial performance.

ARM is a South African-based diversified mining corporation led by billionaire businessman Patrice Motsepe.

According to figures from the group’s recently published financial statements, its profit at the end of its 2022 fiscal year fell by more than seven percent, from R15.47 billion ($895 million) in 2021 to R14.36 billion ($830.5 million), owing to a drop in revenue from R21.46 billion ($1.24 billion) to R18.41 billion ($1.06 billion).

The decrease in income can be attributed to iron ore prices, which went from more than $200 per tonne at the start of ARM’s 2022 fiscal year to $110 per tonne.

On Tuesday morning, iron ore prices fell below $100 per tonne for the first time in over five weeks, indicating that China’s steel sector crisis is worsening. This could exacerbate ARM’s financial performance in the present fiscal period.

Aside from the low income earned from iron ore and platinum group metals sales in the period under review, the decline in earnings can also be attributed to increased operating expenses from R2.7 billion ($156.2 million) last year to R3.2 billion ($187.4 million) this year.

Despite the reduction in earnings, ARM’s total assets rose from R53 billion ($3 billion) to R59.1 billion ($3.4 billion), while retained earnings increased from R34.4 billion ($2 billion) to R40.6 billion ($2.35 billion).

In accordance with the group’s dividend guiding principles for the 2022 fiscal year, the board approved and declared a final dividend of R20 ($1.158) per share, the same amount given to shareholders last year.

The amount to be paid is about R4.49 billion ($260 million) and will be subject to dividend withholding tax.

ARM is a major South African mining and minerals company with positions in a variety of mines, including iron, coal, copper, gold, platinum, and other precious metals.

Motsepe is the president of the Confederation of African Football. He founded ARM in 1997 as South Africa’s first Black-owned mining company. Motsepe owns 89,092,411 shares of the company, representing a substantial 39.7-percent stake.