LONDON (ShareCast) – (ShareCast News) – Antofagasta (Other OTC: ANFGF – news) posted a large drop in first-half profit as revenue fell on the back of declining copper and by-product prices and shipment delays, yet its shares were the among those carried highest in Tuesday’s market rebound. The Chilean miner said it remained on track to achieve its targeted cost savings of $ 160m for the year and argued that as a cash-generative producer with strong balance sheet it was “well positioned” for the low point in the copper price cycle.
Despite this optimism, pre-tax profit slid a mighty 63.8% to $ 297.3m in the six months ended 30 June as revenue dropped 31.4% to $ 1.79bn.
Earnings before interest, tax, depreciation and amortisation were down 48.6% from the first half of 2014 at $ 561.6m. Analysts had been expecting EBITDA of around $ 595m.
Earnings per share, meanwhile, came in at 8.8 cents, which is a 72% drop from the same period last year, but roughly in line with consensus forecasts.
Antofagasta cut its interim dividend to 3.1 cents per share from 11.7 cents a year earlier.
The Chilean copper miner said the decline in revenue reflected a 17.8% drop in realised copper prices as well as lower by-product revenues and a 15.5% decrease in sales volumes.
Chief executive officer Diego Hernandez said: “With our robust balance sheet and cash generative operations we are well positioned for the current low point in the copper price cycle.
“Our position has recently been improved by the sale in June of our water division and this position of financial strength allows us to view the current trading environment both as a time that presents opportunities, as well as a time of challenge.
“Throughout this period of lower copper prices Antofagasta has had a rigorous approach to cost control at our operations and we are on-track to make $ 160 million savings in 2015. Good-quality assets and tight capital discipline means we can weather the current downturn and maintain our competitive position in this challenging environment and when the copper cycle begins to recover, we will enjoy healthy margin growth.” As far as output is concerned, Antofagasta’s first-half copper production was 303,400 tonnes, 12.9% lower than the same period last year, mainly due to lower grades as expected and lower throughput and recoveries at the Los Pelambres mine. It (Other OTC: ITGL – news) also reflects the impact of protests at Los Pelambres.
Gold (Other OTC: GDCWF – news) production was 112,500 ounces, down 11,300 ounces from last year on the back of lower production at Los Pelambres.
Antofagasta, which expects the copper market to retain a small surplus in the second half, said the average realised copper price fell to $ 2.54 per pound from $ 3.08 in the first half of 2014.
