Zimplats’ Profitability Bounces Back: A Silver Lining Amid Revenue Decline in H1
HARARE – Zimplats Holdings Limited faced a decline in revenue for the half-year ended 31 December 2024, but the overall financial performance showcases a remarkable recovery in profitability attributed to efficient cost management and operational effectiveness.
For the half-year period ending December 31, 2024, Zimplats reported revenue of US$350.2 million, a decrease from US$372.8 million for the same period in 2023. The drop in revenue was primarily driven by a 13% decline in sales volumes, which fell to 279,740 6E ounces, down from 320,196 ounces in the prior half. Despite this decline, the company noted a general improvement in average metal prices, particularly for gold, platinum, and rhodium, which helped mitigate some of the losses in sales.
However, in a positive turn, Zimplats recorded a profit after tax of US$4.1 million for the half year, a substantial turnaround from the loss of US$8.8 million reported in the previous corresponding period. This shift represents a profit margin of approximately 1.17%, indicating that the company has successfully navigated operational challenges.
The significant improvement in profitability was attributed to rigorous cost management strategies. The cost of sales decreased to US$323.4 million, a reflection of the company’s ongoing efforts to control operational expenses despite the increase in production costs per 6E ounce. Administrative expenses also saw a decline, contributing to the enhanced bottom line.
Basic earnings per share (EPS) increased to 4 US cents as compared to a loss of 8 US cents per share a year prior, highlighting the company’s ability to convert difficult trading conditions into improved shareholder returns.
Commenting on the results, the group said, “While we faced pressures on revenue due to lower sales volumes, our focused approach to cost management and operational efficiencies has allowed us to rebound from the losses of last year. We are cautiously optimistic about the future as we continue to adapt to the evolving market landscape.”
Despite the promising recovery in profitability, concerns over liquidity persist. The company’s cash and cash equivalents have decreased to US$41.4 million from US$78.1 million at the end of the previous year, raising questions about the short-term financial viability in the mining sector and ability to fund future capital projects.
The company accessed borrowings of US$4.5 million during the period, indicating an active approach to leverage financing for growth while managing existing debt levels
Zimplats remains committed to its production goals and is strategically positioned to capitalize on fluctuations in the platinum group metals market. With external factors affecting the mining sector, including regulatory changes and global commodity prices, the company emphasizes its agility in responding to market conditions.
Looking ahead, Zimplats plans to maintain a strong focus on operational efficiency while navigating the challenges posed by the current economic climate. Investors and stakeholders will be keenly watching how the company leverages its recent success to secure sustainable growth in the coming months.–finx
