The rise in the price of gold and silver has been excellent news for shares in Fresnillo (FRES) so far this year, but full-year results contained a number of disappointments. Chief among them was an announced cut to 2016 capital expenditure budgets, reflecting concerns around the sustainability of precious metal prices.
Last year was instructional on this front. The average realised price for an ounce of gold fell 10.4 per cent in the period to $1,127 (£805), while silver dropped 16.1 per cent to $15.6 per ounce. Fresnillo compensated for these falls by increasing production, particularly for gold, which at 762,000 ounces beat top-end guidance by 4.3 per cent.
Guidance for 2016 suggests this year's production increase will be more modest, despite the recent rally in prices. The Mexican miner's chief executive Octavio Alvídrez does not expect "significant shifts in the factors driving current volatility", and sees no "clear catalyst that would support a return to higher prices".
Analysts at Numis expect adjusted EPS of 25¢ and pre-tax profit of $313m, rising to 55¢ and $619m in 2017.
FRESNILLO (FRES) | ||||
---|---|---|---|---|
ORD PRICE: | 985p | MARKET VALUE: | £7.25bn | |
TOUCH: | 983-985p | 12-MONTH HIGH: | 1,025p | LOW: 570p |
DIVIDEND YIELD: | 0.2% | PE RATIO: | 144 | |
NET ASSET VALUE: | 318¢ | NET DEBT: | 12.5% |
Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
---|---|---|---|---|
2011 | 2.20 | 1.50 | 126 | 103 |
2012 | 2.20 | 1.20 | 103 | 57.9 |
2013 | 1.70 | 0.40 | 32.9 | 27.3* |
2014 | 1.41 | 0.25 | 14.7 | 3.0^ |
2015 | 1.44 | 0.21 | 9.6 | 5.45 |
% change | +2 | -15 | -35 | +82 |
Ex-div: 21 Apr Payment: 9 May £1=$1.40 *Excludes special dividend of $50.1m, equivalent to 6.8¢ a share. ^Excludes special dividend of 5.0¢ a share. |