Impala Platinum Holdings Ltd. (IMP.JO) Thursday said it has cut its capital expenditure plans by a third and is trimming operating spending on an ongoing basis to ensure each ounce produced is profitable.

The Johannesburg-based company, the world's second-largest platinum producer, was cautious on the outlook for 2009 despite having posted a 13% rise in net profit for the six months to the end of December as a weaker rand to the dollar offset sharp falls in platinum group metals prices.

"With world economies and their financial systems still on life support, it is increasingly difficult to forecast the outcome for 2009," Implats said. "Suffice to say we do not expect any major recovery in automotive demand."

Platinum during the course of 2008 hit a record high, only to fall rapidly to five-year lows as demand from the key automotive industry slumped amid the global economic crisis. The fall in the price of the metal undermined Implats' plans to acquire South Africa's Northam Platinum Ltd. (NHM.JO), as well as Xstrata PLC's (XTA.LN) bid for Lonmin PLC (LMI.LN).

Implats said it will defer long-lead projects, which will result in outlay being reduced by about 10 billion rand ($983 million) from previous plans to spend ZAR30 billion over five years.

Chief Executive David Brown said the company's dividend quantum would be reviewed for the full year, after an interim payout of ZAR1.20 a share was declared against a year-ago dividend of ZAR3/share.

Larger rival Anglo Platinum Ltd. (AMS.JO) has cut its capital expenditure plan by about a third to ZAR9.1 billion and last week said it will cut as many as 10,000 jobs in 2009, about 13% of its workforce. It didn't declare a final dividend for 2008, blaming the decision on the economic climate.

Net profit rose to ZAR5.29 billion in the six months to the end of December from ZAR4.66 billion a year earlier, Implats said. Revenue for the period, however, declined to ZAR16.24 billion from ZAR16.32 billion due to a drop in sales volumes.

Implats, which mines platinum group metals on South Africa's Bushveld Complex and Zimbabwe's Great Dyke, said gross platinum production for the six months was almost 15% lower at 878,000 ounces.

The company is expecting gross output for the fiscal year of 1.7 million ounces, less than management had previously been anticipating and down from 1.91 million the year before, Brown said.

The shortfall is due largely to the poor performance of the company's Rustenburg operation as well as less ore sent by other companies for processing, Brown said.

At 0845 GMT, Implats stock was trading 0.7% lower at ZAR136.57. Angloplat's shares were 0.2% higher at ZAR451.05, in line with a gain in the broader market.

Implats is expecting a tough second half to the year and into fiscal 2010, Brown said, adding he was hopeful the market will see some improvement later next year.

The company's Marula Merensky and Leeuwkop projects have been deferred until further notice, although it is pressing ahead with the development of 16, 17 and 20 shafts at the Impala Platinum operation as well as the Phase 1 expansion project at majority-owned Zimbabwe-focused Zimplats Holdings Ltd. (ZIM.AU).

Brown said the company has already invested heavily in these latter projects, which in South Africa are replacement shafts and in Zimbabwe should help Zimplats return to profitability.

"Cash preservation has become our top priority," Brown said, adding that Implats would work to ensure all ounces are profitable, production targets are met and costs are brought into line with output.

Company Web Site: www.implats.co.za

-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com
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