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African Rainbow Minerals (ARM), under the leadership of Africa’s first Black billionaire Patrice Motsepe, faced a substantial setback as it recorded a 43-percent decline in headline earnings during the first half of the 2024 fiscal year, falling below $160 million.
According to the group’s recently released interim results, headline earnings plummeted by 43 percent, falling from R5.17 billion ($275.5 million) in the first half of 2023 to R2.96 billion ($157.8 million) in the same period of 2024.
This downturn was attributed to a significant drop in platinum group metals (PGM) commodity prices, resulting in a decline in revenue from R9.37 billion ($499.34 million) to R6.6 billion ($351.7 million).
ARM’s basic earnings slump to $65 million in H1 2023 amidst notable impairments
In specific terms, basic earnings for ARM were reported at R1.216 billion ($65 million) or R6.2 ($0.33) per share, a stark contrast to the R4.388 billion ($233.9 million) or R22.39 ($1.19) per share recorded in the first half of 2023. This drastic dip was primarily due to impairments of R1.739 billion ($92.7 million) after tax, driven by a significant decrease in profitability from its PGM operations.
The impairments were most prominent in ARM Platinum, the group’s platinum operations, where profitability plummeted due to lower PGM commodity prices. Similarly, ARM Ferrous, the iron ore division, faced impairments caused by lower projected sales volumes and pricing.
ARM’s financial resilience: A close look at retained earnings and total assets
African Rainbow Minerals, a prominent South African mining and minerals company, holds strategic positions in various mining projects covering iron, coal, copper, gold, platinum, and other precious metals. Motsepe holds a 45.9 percent stake in ARM. This stake cements his position as one of Africa’s richest individuals.
Despite the recent double-digit decline in headline earnings, ARM’s retained earnings experienced a marginal decline from R41.08 billion ($2.19 billion) as of Dec. 31, 2022, to R40.89 billion ($2.17 billion) as of Dec. 31, 2023. However, the total assets of the company increased from R60.4 billion ($3.22 billion) to R64.4 billion ($3.43 billion).
Company’s dividend strategy shift: $0.32 per share interim dividend declared, a departure from previous $0.75
In adherence to the company’s dividend guiding principles, the board of directors approved and declared an interim dividend of R6 ($0.32) per share, signaling a departure from the R14 ($0.75) per share declared a year ago.
The dividend, amounting to approximately R1.348 billion ($71.9 million), is scheduled for payment on Mon., April 8, 2024, to shareholders recorded in the books of the company at the close of business on Fri., April 5, 2024.
Notably, Motsepe, holding a 45.9-percent stake in ARM, is expected to receive a significant portion of the interim dividend, further solidifying his standing among Africa’s wealthiest individuals.
