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Antofagasta nearly doubles 2017 dividend as it posts sharp rise in earnings, thanks to higher copper prices

The FTSE 100-listed Chilean miner said its 2017 underlying earnings (EBITDA) rose by 59% to US$2.6bn, up from US$1.63bn in 2016, as its EBITDA margin improved to 54.5% from 44.9%
Mining truck
Antofagasta is paying a final dividend of 40.60 US cents, boosting its total payout by 177% to 50.9 US cents per share

Antofagasta PLC (LON:ANTO) reported a sharp rise in full-year earnings, thanks to higher copper prices and said it would nearly double its dividend.

The FTSE 100-listed Chilean miner said its 2017 underlying earnings (EBITDA) rose by 59% to US$2.6bn, up from US$1.63bn in 2016, as its EBITDA margin improved to 54.5% from 44.9%.

READ: Antofagasta's production challenges should subside in 2019, says Berenberg

Antofagasta's revenue increased by 31% to US$4.75bn, up from US$3.62bn in 2016., and its free cash flow jumped to US$1.20bn, well above the US$343.0mln seen in 2016.

The miner’s net debt at the year-end was US$456.4mln, compared to US$859.6mln at the end of June 2017, while capital expenditure rose, as planned, to US$899.0mln from US$795.1mln.

The firm reiterated its forecasts for 2018 copper production guidance of between 705,000 and 740,000 tonnes, which would compare to 704,300 tonnes in 2017.

It said it expects the copper market to tighten in the second half of 2018, and to be in balance or in a slight deficit for the whole year, with 2019 more likely to be in deficit

Antofagasta’s CEO Iván Arriagada said: "Our priorities for 2018 are continued capital discipline and the next phase of our growth - notably the review and expected approval of the Los Pelambres Incremental Expansion project and progressing expansion plans at Centinela."

The group is paying a final dividend of 40.60 US cents, boosting its total payout by 177% to 50.9 US cents per share, up from 18.40 US cents in 2016.

In a note to clients, analysts at RBC Capital said: “The better-than-expected dividend, and better net debt will help to offset the ~25% increase in Pelambres expansion capex (c.2% of ANTO market cap), however we highlight ANTO is trading at its lowest relative level to consensus in the past 2 years at (5.7x EV/EBITDA, RBC 5.5x).”

RBC repeated a ‘sector perform' rating on Antofagasta with a price target to 1,060p.

In afternoon trading, Antofagasta shares were up 1.9% at 904.8p.

 -- Adds broker comment, updates share price --

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