Impala Platinum, the world's second-biggest producer of the metal, said first-half profit probably fell as much as 79 per cent because of a drop in output, rising costs and a writedown.
Earnings per share excluding one-time items were probably in the range of 1.20 to 1.38 rand in the six months through December compared with 5.73 rand a year earlier, the Johannesburg-based company said yesterday.
The median estimate of three analysts in Bloomberg survey was for 1.57 rand. Impala is recording a writedown of 603 million rand. Upheaval has plagued platinum and gold producers since August, when thousands of workers staged a series of illegal strikes, winning pay increases of as much as 22 per cent. Adding to mining costs, Eskom Holdings, which supplies about 95 per cent of South Africa's power, is seeking 16 per cent average annual tariff increases until 2018 to fund expansion. Inflation in Africa's biggest economy was 5.7 per cent in December.
The expected decline in earnings "is due to a decrease in mine-to-market throughput, above-inflation cost increases and the impairment of long-term receivables," the company said.
Impala dropped 3.4 per cent to 159.52 rand in morning trading in Johannesburg, the lowest intraday level since December 19. The company's six-month financial results for the period ended December 31, will be released on Thursday.
Credit Suisse expects platinum and palladium to outperform gold in the near term, as they benefit from stronger investor inflows as a result of bullish supply-demand dynamics. Noting a recent lacklustre action in gold, Credit Suisse said "the focus is on the more cyclical precious metals such as platinum and palladium".
Investor appetite for platinum and palladium had picked up in recent weeks because of supply jitters in South Africa, a major global producer of both metals.