Antofagasta (ANTO) revealed a 12 per cent drop in interim cash profits to $1.13bn (£681m), due both to lower copper output and lower prices. But the Chilean copper producer still felt able to reaffirm its full-year guidance and bump up its interim dividend by nearly a third.
The fall-away wasn’t totally unexpected, as lower grades at the Los Pelambres and Esperanza mines had been flagged. This had a detrimental effect on unit costs, as did agreements signed with labour unions over one-off signing bonuses at the mines. Overall unit costs were up 6 per cent on the 2013 half year - though cash margins remained relatively robust. Antofagasta, in common with its industry peers, has been looking at ways of reining in costs. Cost synergies are expected to flow from the recently announced merger of its Esperanza and El Tesoro mines into a single operation called Minera Centinela.
However, market conditions remain challenging. The average copper sales price received by Antofagasta was 2.2 per cent lower than in the first half of last year, and has trended even lower since June. The underlying problem is that global copper markets have moved into surplus, while Chinese inventories remain well stocked.
Westhouse Securities expects 2014 EPS of 72.3p, falling to 62.3p next year.
| ANTOFAGASTA (ANTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 790p | MARKET VALUE: | £7.8bn | |
| TOUCH: | 789-790p | 12-MONTH HIGH: | 960p | LOW: 733p |
| DIVIDEND YIELD: | 7.5% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 627¢ | NET CASH: | $145m | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 2.78 | 981 | 40.1 | 8.9 |
| 2014 | 2.66 | 851 | 33.6 | 11.7 |
| % change | -4 | -13 | -16 | +31 |
Ex-div: 17 Sep Payment: 09 Oct £1 = $1.66 | ||||
