KAZ Minerals (KAZ) might be able to look back at the first half of 2019 and say it was trying to invest in growth at the bottom of the market.
But it currently looks like it has been caught on the hop by the low copper price, which has come as it has spent big on the Baimskaya project in Russia. As a result of the transaction completing in January, net debt has climbed 29 per cent to $2.6bn, through a cash outlay of $436m for the project, and shareholders have been diluted through the issue of $233m of new equity.
The weak copper price contributed to the balance sheet issues, leaving revenue flat on higher production and cash profit down 10 per cent to $620m.
KAZ’s Aktogay mine performed well, with year-on-year copper production for the half up 22 per cent to 74,100 tonnes and cash costs net of byproducts flat compared to last year. KAZ chief executive Andrew Southam said copper prices would likely remain depressed for the rest of the year. He said the dividend cut year on year had come because of global demand headwinds on top of the company’s current “period of significant capital investment”.
Consensus forecasts compiled by Bloomberg see KAZ’s full-year cash profit at $1.15bn, and $1.18bn in 2020.
| KAZ MINERALS (KAZ) | ||||
| ORD PRICE: | 446p | MARKET VALUE: | £2.1bn | |
| TOUCH: | 446-447p | 12-MONTH HIGH: | 745p | 422p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 377¢* | NET DEBT: | 144% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 1.10 | 355 | 62.0 | 6.0 |
| 2019 | 1.05 | 289 | 48.0 | 4.0 |
| % change | -4 | -19 | -23 | -33 |
| Ex-div: | 3 Oct | |||
| Payment: | 25 Oct | |||
| £1=$1.21 | ||||
