* Platinum output up 5.5 pct but seen down in FY12
* Headline earnings up 41 pct to R11.05 per share
* CEO says Zimbabwe ownership policy cannot work
(Writes through with CEO, analyst comments, details)
By Ed Stoddard
JOHANNESBURG, Aug 25 South Africa's Impala
Platinum Holdings (Implats), the world's second largest
platinum producer, said on Thursday that its headline earnings
for the 2011 financial year rose 41 percent as it reaped the
benefit of rising prices.
Implats' headline earnings per share for the financial year
that ended June 30 soared from 786 cents to 1,105 cents, near
the top end of the 1,075 to 1,115-cent range the group had
flagged in advance to the market.
Higher prices, which started the financial year around
$1,500 ended near $1,800 an ounce, and a 5.5 percent rise in
platinum output to just over 1.83 million ounces, were the main
drivers behind the increased earnings.
Implats also said it was on course to reach platinum output
of 2 million ounces by 2014 as new shafts ramp up but before
then production would be restrained by aging infrastructure and
was seen falling 7.5 percent to 1.7 million ounces over the 2012
Analysts said the group had some things in its favour as
over the long term platinum demand looked set to remain robust.
It is the key metal needed for catalytic converters used to
control exhaust emissions for cars and Implats accounts for
close to 30 percent of global platinum supply.
"The underlying trends are quite good ... anything that
emits noxious fumes will have to be regulated some day," said
Sasha Naryshkine, an analyst at Vestact in Johannesburg.
But the group faces challenges including rising power costs,
safety concerns, bad labour relations and uncertainty about its
Zimbabwe unit Zimplats as the government there tries to
force foreign miners to transfer 51 percent of their local
stakes to black investors in the country.
The possibility of a strike in its South African operations
looms and that could impact output this year while the outcome
may herald another round of steep wage hikes.
"Costs and safety and Zimbabwe are major concern. Who likes
uncertainty? We've been sellers of the stock and been tossing
them out of core portfolios," said Naryshkine.
Implats' share price is down about 27 percent in the year to
date, according to Thomson Reuters data, while the spot platinum
price is up about 2.6 percent.
Implats has a lot riding on its Zimbabwe operations as they
account for close to 10 percent of group production and
expansion there is a key part of its strategy to reach 2 million
ounces by 2014.
ZIMBABWE POLICY "DOES NOT WORK"
In unusually blunt language on the issue, Implats chief
executive David Brown said Zimbabwe's ownership drive was an
unworkable policy that would damage the country.
"We believe that 51 percent equity just does not work,"
Brown said on a conference call with journalists.
"What they are doing is very bad for the country ... and has
the potential to retard investment," he said. He also said the
company wanted to see the law changed.
In the most recent twist to the saga, Zimbabwe's Empowerment
Minister Saviour Kasukuwere wrote to the company on Aug. 17
rejecting its proposals on the issue and directing it to offer a
revised plan within 14 days.
Zimbabwe has the world's second-largest known platinum
reserves after neighbouring South Africa and market watchers and
investors are therefore keen to see how the drama unfolds
against the backdrop of strong commodity prices.
Looking ahead on other fronts, Brown said he saw platinum's
spot price ranging between $1,750 and $1,950 and ounce over the
next six to nine months.
He said increasing power rates remained a concern after the
company saw unit costs rise eight percent in the last financial
year to 10,867 rand ($1,502) per refined platinum ounce.
Revenue for the period under review rose 30 percent to 33.1
billion rand. The dividend for the full year rose 46 percent to
570 cents per share.
($1=7.233 South African Rand)
(Reporting by Ed Stoddard; Editing by David Cowell)