MONEY LIVE | Glencore set to report bumper profits after commodities boom

York Timber appoints interim CEO

Forestry group York Timber has appointed Gerald Stoltz as its interim CEO, following the sudden passing of Pieter van Zyl earlier this month. Stoltz is also the CFO of the Sabie headquartered group and will serve in both positions until a new CEO is appointed. “York has commenced with the process of identifying and appointing a new CEO and shareholders will be advised of the appointment of a new CEO in due course,” said York Timbers in a statement. Van Zyl had been with the company since 2009 when he was appointed as CEO, while Stoltz joined in 2013.

EOH expects profit despite 'extremely challenging' period

In an update for the second half of its financial year, IT firm EOH said it still expects to post a positive operating profit and reported EBITDA for the full year to end-June – despite the “extremely challenging” operating environment in South Africa, which negatively impacted its revenue.

Setbacks included the third pandemic wave, load shedding and the civil unrest in KwaZulu-Natal and Gauteng.

EOH suffered an operating loss of R1.2 billion in the previous financial year, with the company still recovering from a fraught period of fraud and irregularity.

Earlier this year, it agreed to pay back over R40 million from contracts awarded by the Department of Defence that were found to be irregular. The Special Investigating Unit, which has been probing procurement contracts awarded by the DoD to EOH worth some R250 million, confirmed it had uncovered irregularities relating to the procurement process, as well as overpricing of Microsoft Licences. The Johannesburg Stock Exchange also fined the company R5 million for errors in its past financial statements. The group has implemented cost control measures - this includes disposal of property and 25% salary cuts across the board.

The company expects to post gross profit margin improvement of between 4 to 6 percentage points from the prior full year (FY2020: 22%). 

Glencore set to report bumper profits after commodities boom

Glencore is set to report another year of bumper profits from its trading business as the commodities giant cashes in on soaring prices, but lowered expectations for production of its own material.

The unit’s core profit is now expected to hit the top end of its guidance range of $2.2 billion to $3.2 billion this year, Glencore said in a statement Friday.

The upgraded outlook would bring earnings from the trading business close to the record $3.3 billion the company reported last year, and help offset a series of setbacks at its own mines that have forced the company to lower some production forecasts.

Commodities from copper to aluminum and thermal coal surged in the first half of the year on booming demand, fueled by trillions of dollars in government stimulus as the global economy works to rebound from the pandemic.

The market moves offer lucrative opportunities for the biggest commodity traders, and rivals Vitol Group and Trafigura Group have also reaped bumper profits.While Glencore’s own mining operations are also benefiting from the soaring prices, the company said Friday it will produce less zinc, nickel and coal than previously forecast because of a slew of operational setbacks.

Glencore cut its nickel production target by 10% to 1.17 million tons, after it extended maintenance at a mine in New Caledonia. The company zinc forecast was lowered by 6% and coal by 8%. It raised its full-year target for ferrochrome output.

The company also reported that it had produced 1,100 tons of cobalt from its Mutanda copper and cobalt mine in the Democratic Republic of Congo.Glencore is processing metal stockpiles as it preparing to reopen the mine -- one of the biggest producers of cobalt, which was closed in late 2019 after prices crashed.

The mine is restarting at a time when cobalt prices have jumped by more than 50% this year, as demand surges for use in the electric-vehicle and other rechargeable batteries.Glencore is scheduled to report first-half earnings next week.

Bloomberg

Imperial inks R4.4 billion deal for African logistics company

Imperial Logistics has announced that it reached an agreement to buy African logistics company J&J Group in a R4.4 billion deal.

The agreement comes on the back of Imperial’s announcement that Dubai Ports World (DP World) wants to buy and delist the local group in a R12.7 billion deal.

Imperial explained that it had received DP World’s consent for the J&J transaction, which will be concluded once regulatory and other conditions are fulfilled. J&J has logistics operations between Mozambique, South Africa, Zimbabwe, Zambia, Malawi and the Democratic Republic of the Congo (DRC).

"This acquisition is in line with Imperial’s 'Gateway to Africa' strategy as it will optimise and expand Imperial’s reach in Africa by providing scale in end-to-end cross border transportation services in key African countries and new industries," said Imperial’s group CEO Mohammed Akoojee, in the announcement. The company plans to use J&J’s routes in the Beira Corridor, which links parts of Zambia, Malawi, Zimbabwe and Mozambique, to the Port of Beira, in Mozambique. 

Markets rally after Fed meeting, Tencent surges as China moves to calm fears 

Markets rose on Thursday as the Federal Reserve acknowledged the US recovery was well on track but it would not taper monetary policy just yet, while Hong Kong was lifted after China sought to reassure investors over its latest regulatory crackdown.

The JSE's All Share Index rose by more than 1% in morning trading, while the rand strengthened to R14.65/$.

Traders were also cheered by progress in Washington on US President Joe Biden's trillion-dollar infrastructure bill, which he has said could "transform America" and add to the monumental amounts of stimulus already pumped into the world's top economy.

The developments overshadowed concerns about the spread of the Delta coronavirus variant that is sending infection rates spiking in several countries - including those with high vaccination rates - and forcing some governments to impose lockdowns or other containment measures.

After a closely watched meeting, the Fed said the pandemic recovery was progressing well but it was still too early to take away the ultra-loose policies that have helped nurse the economy back to health.

The central bank has said it will maintain its massive bond-buying and record low interest rate scheme for as long as it takes to tame unemployment and keep inflation running hot for an extended period.

It said the worst-hit sectors "have shown improvement but have not fully recovered" and cautioned that "risks to the economic outlook remain".

Referring to a time when the Fed can begin tapering, boss Jerome Powell told reporters: "We're not there. And we see ourselves as having some ground to cover to get there."

However, he said policymakers had taken a "first deep dive" on how to begin winding the bond-buying down but no decision had been made.Observers said that with no meeting set for August, the bank was unlikely to move until the back end of the year.

While the Fed news was met with a shrug on Wall Street, Asia enjoyed gains, having endured a volatile week.Tokyo, Sydney, Seoul, Singapore, Mumbai, Wellington, Taipei, Bangkok Manila and Jakarta all rose.But Hong Kong was the standout, piling on more than three percent, extending Wednesday's 1.5 percent rally.

The advances in Hong Kong came after Chinese authorities tried to soothe fears that their recent crackdown on the private education, tech and property sectors was not a drive against money-making companies.

China's securities regulator held a hastily convened meeting with top investment bank heads Wednesday night, which left some feeling that the education measures - banning tuition firms from making profits or raising capital - were targeted and not intended to hurt companies in other industries, Bloomberg News reported.

State-run media has also looked to temper fears across trading floors, saying the rout had gone too far and that economic fundamentals remained strong.

Tech giant Tencent - which has been targeted over its vast exclusive music rights - surged around 10%. Naspers and its subsidiary Prosus, which owns around 28% of Tencent, gained more than 4% on Thursday morning. 

- AFP

Vukile says damage to malls less than expected

The damage its malls suffered during the recent unrest in KwaZulu-Natal and Gauteng was less than previously thought, with the estimated cost of repairs around 2% of the value of its South African retail portfolio, the property group Vukile said in a statement on Thursday.

Its KwaMashu Shopping Centre in KwaZulu-Natal has, however, suffered significant structural damage, representing 60% of the total damage incurred to its local portfolio. It is expected that the centre will be fully operational by April 2022.

Durban Workshop did not suffer material damage and is expected to be fully operational by the end of October 2021. Hammarsdale Junction and Pinetown Pine Crest, which suffered damage limited to shopfronts, roller shutter doors and fixtures and fittings, are expected to be fully operational before the end of September.

Daveyton Shopping Centre and Soweto Dobsonville Mall are currently operating at 85% and 50% capacity respectively, having suffered damage mainly to shopfronts. These centres are expected to be fully repaired and operational by mid-August 2021.

Total damage is significantly lower than the value for which Vukile is insured, the company added. "In addition, Vukile has ample undrawn facilities at its disposal to enable the company to effect repairs ahead of its insurance claims being finalised, thereby ensuring its centres are fully operational as quickly as possible. Vukile is also fully insured for the potential loss of rental income which is expected to represent less than 3% of annual gross rental income from South Africa."

Altron gets new chair, CFO

Altron has appointed a new chairman, Stewart van Graan, to replace Mike Leeming, who is retiring.

Van Graan, former managing director of Dell SA, has been an Altron director since 2017.

Altron has also appointed Nicholas Bofilatos, 39, as its chief financial officer. He was previously a financial executive at the company. 

Corporate credit demand continues to contract, amid uncertainty of economic recovery

Private sector credit extensions contracted for a fourth consecutive month in June.

According to Reserve Bank data, private sector credit extensions contracted at a rate of -0.6% year-on-year in June, compared to a fall of -0.4% in May.

Corporate credit continued to contract, by 5.2% year-on-year in June, compared to 5% recorded in the prior year. "Corporate credit growth has been subdued amid weak private sector investment rates and uncertainty regarding the economic recovery prospects," said Investec economist Kamilla Kaplan.

Corporate earnings have also recovered, since the harsh lockdown during the second quarter of 2020 - this may also be contributing to a "suppressed" demand for credit, Kaplan added.

Household credit extension growth remained steady at 5.6% year-on-year in June.

"Household credit demand for asset-backed finance has been supported by low interest rates and a willingness and ability to purchase big-ticket items among higher-income earners, whose incomes were less impacted by the economic fallout from the lockdowns than lower income earners," said Kaplan.

"Depressed consumer confidence, a weak labour market as well as uncertainty over future income, is likely restraining both the uptake and supply of unsecured credit," she said.

Golden Arrow owner wants to change name

The board of Hosken Passenger Logistics and Rail, which manages the Golden Arrow bus service in Cape Town, has proposed that the company changes its name to Frontier Transport Holdings. 

The name change is subject to shareholder approval.

Attacq says properties not damaged by unrest, thanks taxis

The property group Attacq says its shopping malls and logistics centres did not suffer any damage as a result of the recent civil unrest in KwaZulu-Natal and Gauteng.

The Mall of Africa and Waterfall Corner were temporarily evacuated on the afternoon of 13 July. But all operations resumed the following day.

"The safekeeping of the Waterfall precinct was, in large part, due to the support of local communities, taxi associations, local law enforcement and private security, all of whom worked together. Attacq expresses its appreciation to these stakeholders."

Implats expects profit hike of at least 20%

Buoyed by a "significant increase" in the dollar basket price for platinum group metals, Impala Platinum says it expects its headline earnings per share for the 2021 financial year to increase by at least 20%, from the R16 billion seen in the previous period.

The producer said it had recorded a 15.6% increase in gross concentrate volumes to 3.29 million platinum ounces in the financial year to end of June, including an increase in concentrate production to 2.37 million ounces from managed operations.

Concentrate production from joint ventures also went up 10.3%.

"Consequently, Implants is expecting headline earnings and headline earnings per share for the period to increase by at least 20% from the R16 billion and 2 075 cents reported for the year ended 30 June 2020.

"Headline earnings and headline earnings per share are expected to be at least R19.2 billion and 2 490 cents, respectively. The company will release its annual financial statements on September 2. It said contributions from its Canada operations had resulted in a 16.3% jump in refined platinum-related material to 3.27 million ounces.

"A significant increase in the dollar basket price for platinum group metals, together with higher 6E sales volumes, resulted in higher revenue and improved profitability for the period," the company said.

The company which also owns a smelting facility in Rustenburg, expects increased capital expenditure to R6.5 billion, from R4.5 billion in the comparative period.

"The increased spend for the period was due to the higher operating rates achieved, the inclusion of Impala Canada for a full reporting period, and the acceleration of spend at Zimplats following approval of the Mupani and Bimha expansion projects."

AECI doubles profit

The explosives and chemicals group AECI increased its half-year headline earnings to R559 million from R254 million in the corresponding period in 2020.

An interim ordinary cash dividend of 180 cents was declared - 80% higher than the 100 cents for the half-year ended 30 June 2020.

Revenue increased by 5% to R11.8 billion, with the company saying that growth was restricted by the fact that not all mining customers in Africa have resumed their operations during the pandemic, and that four large customers in the oil refining and industrial sectors did not resume their operations in the period.

Tencent suspends WeChat registrations amid Chinese tech turmoil, Naspers and Prosus bleed

Tencent said it was suspending new user registrations for its WeChat services, adding to uncertainty for the technology sector that’s in the midst of a two-day selloff. WeChat, which already has more than one billion users, is undergoing a "security technical upgrade" in accordance with relevant laws and regulations, Tencent said in an online statement. It expects to resume new individual user registrations around early August.

Investors have fled Tencent and its internet peers over the past two days after China announced its toughest-ever curbs on the online education industry and issued a series of other edicts governing illegal online activity and food delivery. Xi Jinping’s government has over the past nine months embarked on a series of crackdowns on China’s most influential private-sector companies over issues ranging from antitrust to data security, as it seeks to rein in the tech giants’ influence over most of everyday life. WeChat - a fixture in daily Chinese life for everything from hailing a cab to ordering meals and paying utilities bills - plays a central role in funnelling traffic to and showcasing Tencent’s businesses.

Tencent, the most valuable company in China, sank 9% on Tuesday, the most since October 2011. The social media and gaming giant has lost over $100 billion in market value in the past two days, joining a slump in China’s biggest tech companies. Meituan, a Tencent investee, sank a record 18% Tuesday, in part as the antitrust regulator ordered food delivery platforms to ensure delivery drivers’ welfare.

Naspers and its subsidiary Prosus, which owns a 28% stake in Tencent, both slumped by more than 8% by Tuesday midday. Naspers has now lost 15% since Monday.

Sasol: Diesel sales above pre-pandemic levels, petrol lagging 

In an operating update for the year to end June, Sasol said higher chemical prices helped it to achieve revenue growth for the year, compensating for lower volumes in its chemicals business after it sold some of its North American operations, and "weather events" in both North America and South Africa impacted its output. 

Its energy business benefitted from a strong recovery in demand following the easing of lockdown restrictions, and higher oil prices in recent months. Brent crude oil ended 2020 at around $50 a barrel, and is currently trading above $72.

Liquid fuel sales volumes were 3% higher, with the demand for diesel recovering to above pre-Covid 19 levels (105% - 108%), while petrol demand remains between 90% to 95% of pre-pandemic levels. 

Tencent drops over 6% as Chinese crackdown leads to third day of share decline

Chinese shares in the crosshairs of Beijing’s regulatory crackdown extended their sharp selloff into a third day Tuesday.

Technology and education shares retreated once again while property stocks also fell. Tencent Holdings Ltd. slumped over 6% after the company’s music arm gave up exclusive streaming rights and was hit with fines. Meituan fell as much as 13% after its record 14% decline on Monday.

The Hang Seng Tech Index dropped as much as 4% and has now fallen into negative territory exactly one year after it was first launched. The broader Hang Seng Index also retreated.

"The key concern now is whether regulators will do more and expand the crackdown to other sectors," said Daniel So, strategist at CMB International Securities Ltd.

"The regulatory concerns will be the key overhang to the market for the second half." So added that it was too soon in his opinion for investors to "bottom fish".

A Chinese regulatory crackdown on some of the economy’s most vibrant sectors, including education and technology, has rocked investors this month. Stocks tumbled in "panic selling" on Monday after regulators on Saturday published reforms that will fundamentally alter the business model of private firms teaching the school curriculum.

Hong Kong’s major retail brokers lowered margin financing for battered Chinese education stocks as investors suffered steep losses. Beijing is attempting to rein in private enterprises that it blames for exacerbating inequality, increasing financial risk and challenging the government’s authority.

Bloomberg

Coffee surges to 7-year highs with more cold headed for Brazil

Arabica coffee futures are hitting fresh highs and extending a dramatic rally with more crop-destroying cold temperatures heading to Brazil, the world’s top grower.

Prices for the high-end beans favoured by Starbucks and other cafe chains have surged more than 30% in a week, and will eventually top $3 a pound, according to Judy Ganes, a consultant with decades of experience in the industry. The last time prices topped $3 was in 2011.

Those sky-high prices are because coffee trees in Brazil were weakened by a drought and then pummeled by two frosts in less than a month. Freezing temperatures last week especially hurt young trees, which will need to be trimmed or replanted. That could affect output for years to come, including slashing next year’s harvest by as much as 5.2 million bags, according to an Ecom Research report seen by Bloomberg.

A bag weighs 60 kilograms, or 132 pounds.

Other major growers are going to reap less coffee than expected, too, like Indonesia, which is also seeing a light crop.“Where is the coffee going to come from” if not from Brazil, which accounts for 40% of world output, Ganes said.

Merafe rockets amid surge in output, profit

The share price of ferrochrome producer Merafe Resources jumped as much as 24% after a strong trading update.

The company said that production from the Glencore Merafe Chrome Venture increased by almost 66% in the six months to end of June, compared to the same period in the previous year - which was affected by stringent Covid-19 restrictions.

Improved plant efficiencies at its smelters also helped to boost production.From a basic loss of 38.3c per share in the previous period, Merafe now expects basic interim earnings per share of between 19.2 cents and 26.8 cents. 

"The expected increase in earnings per share and headline earnings per share is primarily driven by higher chrome ore and  ferrochrome prices and higher sales volumes which were partially offset by a stronger average rand-dollar exchange rate."

Headline earnings per share would be between 23.1 cents and 23.3 cents compared to 1.1 cents for the prior comparative period.

Merafe Resources through its subsidiary, Merafe Ferrochrome, is involved in chrome mining and the beneficiation of chrome ore into ferrochrome. The Glencore-Merafe Chrome Venture operates five ferrochrome smelters and eight mines.

BlackRock now owns 5% of Old Mutual

In a JSE statement, Old Mutual confirmed that the US investment giant BlackRock bought shares amounting to a 5% stake in the SA company.

BlackRock controls $9 trillion in investments, making it the largest money manager in the world, according to Business Insider.

Tiger Brands down amid canned goods recall

Shares in Tiger Brands were down by 4% in late-morning trading on Monday. Earlier in the day, the company announced that it would immediately recall about 20 million KOO and Hugo's canned vegetable products over safety concerns due to potentially defective cans. 

Asian markets hammered as Chinese tuition reforms bite

Markets in Asia mostly fell Monday morning, led by Hong Kong after Beijing at the weekend further cracked down on China's tech firms, while education companies were hammered as the government unveiled sweeping reforms of the sector.

The broad losses across the region came as traders continued to fret over the fast spread of the Delta coronavirus variant, which has sent infections spiking and forced some governments to reimpose economically painful lockdowns or other containment measures.

The selling extended from Friday, despite a strong lead from Wall Street, where all three main indexes ended at record highs.

Bitcoin jumps to above $38 000 thanks to Musk

Bitcoin rebounded sharply Monday, hitting a one-month peak above $38,000, as US electric carmaker Tesla expressed fresh support for the world's most popular cryptocurrency.

Bitcoin surged 10.6 percent to reach $38,145 on Monday morning, as investors cheered the supportive comments from Tesla tycoon Elon Musk.

- AFP

Sea Harvest profit boosted by SA fishing

In a trading update for the six months to end-June, Sea Harvest said its basic headline earnings per share will be between 14% and 23% higher, largely driven by the strong performance of the South African fishing segment.