Lonmin Plc’s share price, swings to a loss in the first half of the FY, plans restructuring

Lonmin Plc, the third-biggest platinum manufacturer in the world, made an official statement, revealing that it swung to a loss due to a strike of the employees in South Africa, which lasted for three months.

Lonmin Plc reported a loss estimated to 202 million dollars during the six months ended March 31st in comparison to a 66-million-dollar profit posted for the same period a year ago. This makes a loss of 35.5 cents per share, compared to a profit of 13.3 cents per share a year earlier. The strike of the union members has affected the companys performance, with more than 155,000 platinum ounces being lost, according to Lonmins statement. The companys announced that it produced 215 117 ounces of platinum in concentrate, which is a 41% drop from the quantity produced in the same period a year ago.

As reported by Bloomberg, the company said: “Operations have been at a virtual standstill for nine of the possible 12 weeks of production. We will start the processing operations during May 2014 to process the remaining” metal in Lonmins stockpiles. The company also reported that it plans to start processing metal until the end of May because it is convinced the strike of the employees will be brought to an end.

In addition, Lonmin Plc has posted a warning about a future restructuring and reorganization of the company, which is seen as “inevitable” due to the considerable damage inflicted by the union members strike. The Chief Executive Officer of the company – Mr. Ben Magara said in the statement, part of which was cited by the Financial Times: “The business will have to be restructured, with consequences on job losses. The depth of this will depend squarely on the return-to-work date and how we ramp up [production].”

The latest offer of the worlds third-largest platinum producer was rejected by the Association of Mineworkers and Construction Union, as they want a salary of 12 500 rand a month by 2017 including benefits to the workers.

Lonmin Plc added 0.64% to trade at 284.50 pence per share by 10:12 GMT, marking a one year change of +2.04%. The market cap of the company was 1.62 billion pounds, as of today.