Despite distractions linked to the sale of its 26 per cent stake in ENRC, Kazakhmys (KAZ) managed to bump up ore production from its 16 operating copper mines by 4 per cent in 2013. That allowed the group to beat consensus revenue estimates, although adjusted cash profits still fell by 40 per cent to $1.1bn (£0.7bn). The bottom line suffered due to $2.1bn in fair value charges and impairments linked to the ENRC sale.
But this performance was overshadowed by news that principal shareholder and former chairman Vladimir Kim has proposed creating a vehicle to hold the bulk of the group's mature high-cost mines. Mr Kim didn't reveal any financial terms, but under the proposals Kazakhmys would retain its potentially lucrative open-pit copper developments such as Bozshakol and Aktogay.
The copper miner's annual production would be reduced by around two-thirds to 85,000 tonnes. However, a spot of downsizing could be just the ticket. It's thought that if the proposals were to go ahead, the residual rump of Kazakhmys' mining complex would place a much lower capital burden on the group. This would help to drive up free cash flows and assuage fears that Kazakhmys will eventually be compelled to raise cash or increase its debt.
| KAZAKHMYS (KAZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 296.6p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 296.2-296.9p | 12-MONTH HIGH: | 679p | LOW: 170 |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 944¢ | NET DEBT: | 18% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 2.4 | 1.0 | 144 | 9 |
| 2010 | 3.2 | 1.6 | 260 | 22 |
| 2011 | 3.6 | 1.6 | 263 | 28 |
| 2012 (restated) | 3.4 | 0.2 | 12 | 11 |
| 2013 | 3.1 | -0.7 | -157 | nil |
| % change | -7 | - | - | - |
Ex-div:- Payment:- £1 = $1.67 | ||||
