Full-year figures from KAZ Minerals (KAZ) reflect the impact of last October’s restructuring. This transferred underperforming assets to a separately owned entity, Cuprum, which will continue to operate under the trading name 'Kazakhmys'. The spin-off is controlled by major shareholder Vladimir Kim and Kazakhmys insider Eduard Ogay.
The intention was to reposition KAZ as a large-scale, low-cost copper producer. With copper prices in the doldrums, it's too early to determine whether the corporate divorce - which leaves KAZ with cheaper open-cast mines - will boost profitability, but there are some encouraging signs. Although full-year earnings were slightly adrift of the City consensus, KAZ managed to generate $355m (£229m) in underlying cash profit from its continuing operations - broadly flat on last year. That's creditable against a backdrop of falling copper prices and a 4 per cent decline in sales volumes.
KAZ produced 83,500 tonnes of copper cathode in 2014, a 9 per cent increase from the previous year. Production should come in at about the same level this year, although KAZ also confirmed that its major growth projects remain on track, with the Bozshakol copper mine due to be commissioned in the fourth quarter.
Broker JPMorgan Cazenove has set an initial price target of 335p.
| KAZ MINERALS (KAZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 256p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 255.5-256p | 12-MONTH HIGH: | 355p | LOW: 161p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 470¢ | NET DEBT: | 46% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 3.2 | 1.6 | 260.0 | 22.0 |
| 2011 | 3.6 | 1.6 | 263.0 | 28.0 |
| 2012 | 3.4 | 0.2 | 12.0 | 11.0 |
| 2013 † | 0.9 | 0.1 | 18.0 | nil |
| 2014 † | 0.8 | -0.2 | -52.0 | nil |
| % change | -9 | - | - | - |
£ =$1.55. †Figures reflect continuing operations following 2014 asset transfer to Cuprum. | ||||
