Sibanye Stillwater: Profit drops from R33.8bn to R19bn YoY

JOHANNESBURG – Sibanye-Stillwater has reported operating and financial results for the six months ended 31 December 2022, and reviewed condensed consolidated provisional financial statements for the year ended 31 December 2022.

SALIENT FEATURES FOR THE SIX MONTHS AND YEAR ENDED 31 DECEMBER 2022

• Significant improvement in safety performance. All indicators improved with the fatal injury frequency rate (FIFR) reducing by 75%
• Strong balance sheet maintained with net cash of R5.9 bn (US$344m) and net cash: adjusted EBITDA at 0.14x (2021:0.17x)
• Profit for the period of R19bn (US$1.2bn) compared to R33.8bn (US$2.3bn) for 2021
• Final dividend of R3.5bn (US$191m) or 122 SA cents per share (26.98 US cents per ADR), full year dividend of R7.37bn (US$421m) equivalent to a 6%* annual yield
• SA PGM operations continue to move down the industry cost curves despite load curtailment impact on production
• Inflation-linked three and five year wage agreements signed at the SA gold operations and SA PGM operations respectively, positioning operations for stability
• US PGM operations recover from one in 200 year flood and repositioned to respond to the changing macro environment
• Progress on Battery metals strategy
• 85% holding in Keliber lithium project obtained and construction of the Keliber lithium refinery commenced in Q1 2023
• US Government offered conditional commitment for a loan of up to US$700 million for the Rhyolite Ridge lithium-boron project

Neal Froneman, Chief Executive Of Sibanye-Stillwater said: “The Group’s performance for 2022 reflects significant positive achievements in some respects, and notable challenges in others. Without doubt, the most significant achievement during 2022, was the ongoing improvement in its safety performance and turnaround in the number of fatal incidents.

The Group operating and financial results for 2022 were impacted by exogenous factors including a more challenging macro-economic and geopolitical environment and the severe weather event in Montana, which impacted our US PGM operations.

Global macro influences, including significant inflationary cost pressures globally, ongoing supply chain disruptions and a deteriorating economic outlook, which reflected in lower demand and lower prices for the metals it produces.

The severe weather event caused regional flooding across Montana in June 2022 and restricted access to the Stillwater mine resulting in the operations being shut for 7 weeks. These are some of the factors the company has previously highlighted as existential threats (the Grey Elephants) which it needs to be mindful of and adapt to, to ensure the sustainability of our organisation and the ecosystems within which we operate.

The industrial action and flooding events resulted in significantly reduced production from the SA gold and US PGM operations during 2022, with a concomitant increase in unit costs. The phased resumption and build-up of safe production after these operational stoppages also negatively impacted production and costs during the second half of the year, resulting in Group revenue declining by 20% to R138.3 billion (US$8.4 billion) for 2022 compared with R172.2 billion (US$11.6 billion) for 2021.

Group adjusted EBITDA of R41.1 billion (US$2.5 billion) for 2022 was 40% lower than the record adjusted EBITDA of R68.6 billion (US$4.6 billion) for 2021, but still the third highest Group adjusted EBITDA recorded since listing. This was despite the SA gold operations recording a R3.5 billion (US$219 million) adjusted EBITDA loss (compared with a positive R5.1 billion (US$346 million) adjusted EBITDA contribution for 2021) and the adjusted EBITDA contribution from the US PGM underground operations declining by 47% to US$386 million (R6.3 billion).

Normalised earnings for 2022 of R21 billion (US$1.3 billion) were 46% lower year-on-year, with normalised earnings of R9.8 billion (US$558 million) for H2 2022, 32% lower than for H2 2021, primarily due to the impact of lower commodity prices and production at the SA gold and US PGM operations.”