Miners are largely a leveraged bet on commodity prices - it's therefore unsurprising that half-year profits at Russia and Kazakhstan-focused miner Polymetal International (POLY) fell sharply on the back of lower precious metals prices this year.
Even though gold and silver production rose 11 per cent year on year to 559,000 gold-equivalent ounces, adjusted cash profit fell 38 per cent to $239m (£153m). That's despite average realised gold and silver prices only falling 13 per cent and 18 per cent, respectively, to $1,422 an ounce and $24.2 an ounce.
Another recent common theme among miners has been higher operating costs and Polymetal couldn't buck that trend, either. Cash costs rose 17 per cent year on year to $787 per gold-equivalent ounce, while all-in cash costs - a more meaningful figure that takes into account extra expenses such as maintenance costs and infill drilling at deposits - increased 9 per cent to $1,210 per ounce. To cap it all off, the company was forced to book $305m of impairment charges against its mining assets and goodwill because of lower metals prices.
Broker Canaccord Genuity forecasts full-year adjusted EPS of 53¢ (110¢ in 2012).
POLYMETAL INTERNATIONAL (POLY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 691p | MARKET VALUE: | £2.69bn | |
| TOUCH: | 691-692p | 12-MONTH HIGH: | 1,231p | LOW: 440p |
| DIVIDEND YIELD: | 3%† | PE RATIO: | 216 | |
| NET ASSET VALUE: | 445¢ | NET DEBT: | 75% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012* | 767 | 231 | 39.0 | nil |
| 2013 | 721 | -265 | -66.0 | 1.00 |
| % change | -6 | - | - | - |
Ex-div: 4 Sep Payment: 26 Sep *Restated †Excludes 50¢ special dividend £1=$1.56 | ||||
