ARM final results June 2018

Revenue for the year increased to R9.603 billion (2017: R9.019 billion), gross profit rose to R1.446 billion (2017: R1.207 billion), profit for the year attributable to equity holders of ARM from continuing operations soared to R4.747 billion (2017: R1.431 billion), while headline earnings per share from continuing operations grew to 2 529 cents per share (2017: 1 791 cents per share).

The Board has approved and declared a final dividend of 750 cents per share (gross) in respect of the year ended 30 June 2018. The amount to be paid is approximately R1 648 million. A maiden interim dividend of 250 cents per share was declared and paid in F2018 bringing the cumulative dividend for 2018 is 1 000 cents per share (2017: 650 cents per share).

Company outlook
Global GDP growth appears to be recovering steadily. China remains a significant consumer of the commodities we produce as infrastructure and consumer demand underpins demand for commodities. Quality of commodities, especially amongst the bulk metals, has become a key differentiator as China seeks to address its pollution challenges through improved efficiencies in heavy industries. This can be seen in the increase of premiums associated with high-grade bulk metals which we believe represents a structural shift in these markets. ARM is well positioned to deliver into this shift given the high quality iron ore and manganese ore produced. We continue to invest in our business to enable us flexibility of product specifications to respond to changing customer needs.

We are also closely watching other global trends especially in the context of the Fourth Industrial Revolution and the potential challenges and opportunities these may create for our business. One such trend of interest has been the advancements made in mobility, particularly clean mobility. Although an increase in electric vehicles as a percentage of total vehicle sales creates opportunities for some of the metals in our portfolio, including nickel and manganese ore, it negatively impacts demand for platinum group metal (which are mostly used in internal combustion engines). We continue to research these potential impacts to ensure that we are well positioned in the future to maximise on opportunities created by these trends but also address the challenges.

Investor confidence and sentiment towards South Africa continues to improve. The Rand versus the US Dollar is expected to remain volatile, impacted by monetary policy direction in the United States, international trade concerns as well as other global and domestic risks.

Our operating environment is not without significant headwinds: community unrest, geopolitical uncertainty, regulatory risk, technology and cyber risks, and social licence risks continue to increase.

We continue to focus on those elements that are within our control. These include adhering to our commitment to capital allocation discipline by striking a balance between maintaining our current business, investing in expansionary and value-enhancing growth and improving on the overall shareholder returns through long-term share price appreciation and dividend growth. To enable this, we will keep a focus on maintaining operating costs to levels at or below inflation, maximising the cash generation from our assets, maximising profit margins and sustaining our available flexibility through a strong financial position.

2018-09-07 08:45:34