Antofagasta’s (ANTO) dividend policy is more flexible than the market assumed. That’s perhaps the chief takeaway from its full-year results, where the big surprise was a proposed final payout of 40.6¢ (29.2p) a share, equivalent to $400m, and almost twice the group’s minimum target return of 35 per cent of underlying net earnings per share.
As this results season has consistently shown, the big base metals miners are locked in their own mini-market for investor attention. Act fast to claim your 4 per cent yield today. And on a backward view, Antofagasta has good reason to launch its own offer. In 2017, better metals prices pushed margins to their highest levels for half a decade; enough to fund $899m of capital expenditure, cut net debt by more than half to $456m, and still generate $1.2bn in free cash flow.
Assuming copper stays above $3 per pound, is there any reason why Antofagasta won’t repeat the trick this year? After all, growth in production is expected to take the sting out of slightly higher cash costs and $1bn of capital expenditure, and labour negotiations at Los Pelambres, Centinela and Zaldívar are all said to have been “successfully completed”. Well, not quite: the latest offer to workers at Los Pelambres has been rejected, and union members have voted to strike.
On average, analysts expect adjusted pre-tax profit of $1.86bn and EPS of 78¢ this year, compared with estimates of $1.85bn and 76.3¢ in 2017.
| ANTOFAGASTA (ANTO) | ||||
| ORD PRICE: | 904p | MARKET VALUE: | £8.91bn | |
| TOUCH: | 904-905p | 12-MONTH HIGH: | 1,071p | LOW: 745p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 742¢ | NET DEBT: | 5% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 5.97 | 2.08 | 66.9 | 95.0 |
| 2014 | 5.15 | 1.52 | 42.8 | 21.5 |
| 2015 | 3.23 | 0.24 | -0.5 | 3.1 |
| 2016 | 3.62 | 0.28 | 12.1 | 18.4 |
| 2017 | 4.75 | 1.83 | 76.1 | 50.9 |
| % change | +31 | +543 | +529 | +177 |
| Ex-div: | 26 Apr | |||
| Payment: | 25 May | |||
| £1=$1.39 | ||||
