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Antofagasta PLC suspends final dividend after tough year

Copper miner Antofagasta PLC shareholders were the latest victims of the weak commodity market as the Chilean copper miner axes its final dividend.
Antofagasta PLC suspends final dividend after tough year
The move was a “stunning change from the glory years of 2010, 2011 and 2012.”

Antofagasta PLC (LON:ANTO) shareholders became the latest victims of the weak commodity market as the Chilean copper miner axed its final dividend.

Last year’s slide in metal prices led fellow copper miners, including Glencore and Anglo-American, to cut final dividend pay-outs in recent months. Following poor full year results, Antofagasta has followed suit.

AJ Bell analyst Russ Mould said the move was a “stunning change from the glory years of 2010, 2011 and 2012.”

Antofagasta paid out three special dividends worth a total of 127p per share over that period.

“An enormous number compared to today’s 486p share price and one that shows how the mining industry’s fortunes have changed as commodity prices have tumbled,” said Mould.

The mining group, one of the world’s major copper producers, saw revenue 34% lower than the previous period at US$3.4bn, while EBITDA (earnings before tax, interest, tax, depreciation and amortisation) fell 58% to US$891 mln. It saw a pre-tax loss of $38mlnin the second half.

Copper prices fell 24% in the period and sales volumes were down 9.5%, prompting the group to scale down production by 10%.

 “We will be positioned to benefit from the recovery when it comes,” said chief executive Diego Hernandez.

"Our focus is on optimising our operations and projects under construction to cut costs and free-up cash flow whilst retaining the flexibility to accelerate investment for future growth if circumstances are appropriate."

Antofagasta, which is 65% owned by the Chilean Luksic dynasty, also sold its water division in the period and acquired 50% of the Zaldivar copper mine. It also closed its oldest operation, Michilla.

Operating profit at its primary site, Los Pelambres, was down from $1,34bn in 2014 to $555mln. Realised copper prices fell to $2.24/lb from $2.95/lb, which impacted profits.

The board’s decision not to pay a final dividend was in line with the group’s policy to pay out at least 35% of annual earnings, it said, which it had done with the interim dividend.

 “This reduction takes the total amount of cuts announced by FTSE 100 firms for 2015 and 2016 to over £5.7 bn,” Mould added.

Antofagasta shares dipped 10% to 481.8p.

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