Home » South African billionaire Patrice Motsepe’s ARM sees profits fall below $500 million

South African billionaire Patrice Motsepe’s ARM sees profits fall below $500 million

by Omokolade Ajayi
Patrice Motsepe

African Rainbow Minerals (ARM), the South Africa-based diversified mining group led by influential billionaire Patrice Motsepe, has announced its financial results for the fiscal year ending June 30, 2023, which fell significantly short of investors’ expectations.

The company reported a decline in profits, citing rail logistics issues, lower production, and weaker commodity prices as the primary reasons for the disappointing performance. This comes after it projected a decline in its headline earnings for the 2023 fiscal year.

According to the recently published financial results, ARM’s profit plummeted by more than 35 percent, dropping from R14.36 billion ($750.8 million) at the end of its 2022 fiscal year to R9.32 billion ($487.3 million) at the close of its 2023 fiscal year.

Headline earnings, the primary profit measure for South African companies, also experienced a 21 percent decrease, falling from R11.34 billion ($592.9 million) to R8.98 billion ($469.5 million).

The Motsepe-led mining group attributed these setbacks to a series of challenges. Rail logistics problems, lower production levels, and unfavorable commodity prices all played significant roles in the decline in earnings

ARM’s revenue for the period under review slumped by 12.5 percent, declining from R18.4 billion ($962.1 million) to R16.1 billion ($841.8 million).

The logistics challenges, attributed to South Africa’s state-owned freight rail operator Transnet, which is grappling with locomotive shortages, cable theft, and vandalism, severely affected ARM’s iron ore, manganese ore, and thermal coal volumes.

The drop in earnings compelled ARM’s board of directors, led by Motsepe, who holds a significant 40.37 percent stake in the company, to declare a final dividend of R12 ($0.63) per share. This is a substantial reduction compared to the R20 ($1.046) per share final dividend paid to shareholders in the previous fiscal year.

Motsepe, the executive chairman of ARM, reaffirmed the company’s commitment to rewarding shareholders even during challenging times, stating: “We declared a final dividend of R12 ($0.63) per share and remain committed to paying competitive dividends whilst pursuing value-creating growth.”

During the recently concluded fiscal year, ARM disbursed R6.66 billion ($348.2 million) in dividends to its shareholders, comprising the interim dividend of R14 ($0.732) and the final dividend of R20 ($1.045) per share declared for the fiscal year 2022.

The disappointing financial results have led ARM to reevaluate its strategies and operations as it navigates the challenges posed by logistics disruptions and market fluctuations in the mining industry.

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