Antofagasta Shares Up as Results Beat Expectations -- Update
August 16 2016 - 6:04AM
Dow Jones News
By Alex MacDonald
LONDON--Shares in Antofagasta PLC (ANTO.LN) rose as the Chilean
copper producer beat market expectations on first-half net profit
by slashing costs faster-than-expected, while cautioning the copper
market will remain volatile in the near term.
The U.K.-listed miner Tuesday reported a net profit of $88.1
million for the first six months of the year compared with $706
million in the same period a year earlier, when it benefited from a
$620 million gain on proceeds from the sale of its water
division.
Revenue fell 19% to $1.45 billion, reflecting lower copper
prices and sale volume but earnings before interest, taxes,
depreciation and amortization, a closely watched earnings metric,
rose 2.3% to $572 million, thanks to a near-25% reduction in
operating costs.
The Ebitda and net profit figure beat analysts expectations of
$532 million and $62 million respectively, according to a
company-complied consensus forecast of 12 analysts. This helped the
stock to rise 5% to 539.5 pence a share by 0825 GMT, while the FTSE
350 mining index was up 2.6%.
Chief Executive Iván Arriagada said the company has already
achieved $124 million of this year's forecast $160 million in
cost-savings by lowering spending on contractors and energy
consumption as well as by reorganizing its support
infrastructure.
The company also said two longstanding cases relating to the Los
Pelambres Mauro tailings dam and its impact on a local community's
water-rights have been resolved. This helps pave the way for the
company to take a decision on one or possibly two major expansion
projects at Los Pelambres and Centinela at the end of 2017.
Mr. Arriagada said the company doesn't plan to return excess
cash to shareholders by way of a special dividend or share buyback,
given the need to maintain a strong balance sheet for potential
investment in expansion projects.
Antofagasta's net debt was almost unchanged at $1.04 billion as
of June-end compared with December-end.
Mr. Arriagada said the company remains interested in acquiring
assets, notably in the Americas, but "we don't think that it is
likey that significant new opportunities will come into the
market," anytime soon. He declined to comment on whether
Antofagasta would be interested in Glencore PLC's (GLEN.LN) Chilean
Lomas Bayas copper mine, which is for sale. Antofagasta was sitting
on a cash and liquid asset pile of $2.2 billion at June-end.
The company also reaffirmed it plans to meet the lower end of
this year's 710,000 to 740,000 metric ton copper production
guidance range, up from 630,000 tons a year earlier, reflecting a
ramp-up at its Antucoya project and the purchase of a 50% stake in
the Chiean Zaldivar mine last December.
The miner declared an interim dividend of $0.031 a share,
unchanged from last year.
"Given the current economic uncertainty we are cautious in our
outlook and remain conservative in our approach to managing
capital," said Mr. Arriagada. He expects the global copper market
will deliver a small surplus of around 300,000 tons of copper this
year and then again next year before swinging to a 300,000 tons
deficit in 2018.
"There are no new projects [in the pipeline]....That will put
pressure on the market," he said.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
August 16, 2016 05:49 ET (09:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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