Sibanye Stillwater (SBSW) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 75% year-on-year to ZAR 127 billion, with adjusted EBITDA up 230% to ZAR 49.4 billion, translating to approximately $3 billion [85][86] - Earnings per share surged by 536 times, resulting in a final dividend of 321 cents per share, bringing the full-year dividend to 371 cents per share, yielding just under 9% [87][88] - Free cash flow reached a record ZAR 19.9 billion, approximately $1.2 billion, with a net cash position of ZAR 3 billion at the end of 2020 [56][88] Business Line Data and Key Metrics Changes - South African PGM operations contributed 60% of adjusted EBITDA, with revenue per 4E ounce up 83% to ZAR 36,700 [85][57] - U.S. PGM operations accounted for 21% of adjusted EBITDA, with revenue per 2E ounce increasing by 53% to $1,900 [85][64] - South African gold operations contributed 19% of earnings, with revenue per kilogram up 43% to ZAR 925,000 [85][70] Market Data and Key Metrics Changes - The South African PGM mineral reserve base increased by 40%, while the U.S. PGM mineral reserve base saw a 7% increase [50] - The average basket price for South African PGM operations rose significantly, contributing to the overall revenue growth [85][57] - The gold market is expected to remain robust due to low interest rates and recovering consumer demand, particularly from emerging markets [81][82] Company Strategy and Development Direction - The company is focusing on embedding ESG excellence in its operations and has committed to achieving carbon neutrality by 2040 [27][30] - Significant capital investments of ZAR 6.8 billion were approved for new growth projects, indicating a strong commitment to future expansion [13] - The company aims to maintain a leading position in dividend payments while balancing capital allocation towards growth projects and debt management [96][97] Management's Comments on Operating Environment and Future Outlook - Management highlighted the fragility of the South African economy and the need for policy changes to encourage investment and economic recovery [101] - The ongoing COVID-19 pandemic has created unique opportunities for operational efficiency improvements [9][10] - The company is optimistic about the future of platinum and palladium markets, anticipating increased demand driven by environmental standards [75][78] Other Important Information - The company has made substantial contributions to the national interest, with sales, royalties, and taxes amounting to ZAR 7.1 billion in 2020, a 213% increase from 2019 [15] - The company is actively involved in community support initiatives, including a commitment of ZAR 200 million towards vaccine distribution [12][13] - The company has implemented a new leadership structure aimed at enhancing performance and ensuring readiness for future growth [39][42] Q&A Session Summary Question: What are the company's plans for capital allocation? - The company plans to allocate ZAR 31 billion of available cash, with ZAR 11 billion for dividends and ZAR 2.6 billion for growth projects, while retaining the balance for working capital and debt repayment [90][91] Question: How does the company view the future of the platinum market? - Management expressed optimism about the platinum market, predicting a price increase to $2,000 per ounce in the near future due to increased demand from automotive applications [75][76] Question: What measures are being taken to ensure safety in operations? - The company is committed to achieving international safety standards and has implemented a robust safety strategy to reduce risks and improve safety performance [45][48]