The 25 per cent devaluation of the Kazakhstan tenge in February led to a sharp cost reduction that helped miner, Kazakhmys, compensate for some of the impact of significantly lower sales. Net cash costs fell to 76¢ (47p) per pound, compared with 116¢ per pound in 2008, aided also by lower input prices.
Raising output at several mines helped the group offset the effects of suspending four mines at the end of last year in the face of the worst of the economic crisis - indeed, ore output declined by just 1.5m tonnes to 16m tonnes. The processing of stockpiled ore and higher recovery rates meant that production of copper cathode actually rose 8 per cent to 170,000 tonnes.
Kazakhmys couldn't escape significantly lower copper prices, however. The average realised copper price in the first half was $4,024 per tonne, 51 per cent lower than in the first six months of last year. The current price of $6,305 represents a strong recovery from the $2,902 at the end of 2008. Furthermore, the debt mountain continues to drag on performance. In March, the group began paying back its $2.1bn loan facility at the rate of $44m per month, and the half-year dividend has been axed to preserve cash in this cause.
Broker Evolution Securities expects full-year pre-tax profits of $473m, giving EPS of 68.6¢ (2008: 185¢).
| KAZAKHMYS (KAZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 950p | MARKET VALUE: | £5.08bn | |
| TOUCH: | 950-951p | 12-MONTH HIGH: | 1,357p | LOW: 171p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 1,192¢ | NET DEBT: | 25% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 2.84 | 886 | 134 | 14.0 |
| 2009 | 1.65 | 645 | 96 | nil |
| % change | -42 | -27 | -28 | -100 |
£1=$1.62 | ||||
