Antofagasta PLC (LSE:ANTO) cut its interim dividend a third despite increasing profits and cash flow in the first half of the year thanks to higher copper prices.
Revenue from the Chilean copper mining giant rose 2.3% to just under $3 billion and underlying profit (EBITDA) up 4.8% to $1.4 billion.
Cash flow from operations swelled 14.5% to $1.5 billion.
CEO Iván Arriagada said the compaby "demonstrated its resilience" in the first half, maintaining EBITDA margins, generating savings and productivity improvements of $130 million and advancing key projects to provide for future growth.
"Importantly, our growth plan remains on track," he said, pointing to the second concentrator at the Centinela mine moving forward ahead of schedule and initial work starting at new projects at Los Pelambres.
"With a strong balance sheet, EBITDA margins and cash flow generation to fund our expansion plans and sustaining capex, the board of directors has approved an interim dividend representing 35% of net earnings, in line with the company's dividend policy."
This resulted in a dividend of 7.9 cents per share, down from 11.7 cents a year ago.
Analyst Mark Crouch at investment platform eToro, noted that after reaching a record high in May, the price of copper has since retraced nearly 20%.
"Not surprisingly, Antofagasta’s share price has moved in near identical fashion.
"Antofagasta shareholders might be asking themselves: is the bull run in copper over or is this just the end of the beginning?
"A leading economic indicator, Dr Copper, as the industrial metal is often referred to, could be diagnosing a period of queasiness ahead for markets following copper's recent sell off. In June, the world's largest consumer of the industrial metal, China, reported copper stockpiles at a four-year high.
"However, with cooling inflation giving way to central banks around the world cutting interest rates, a bump in economic activity could likely follow, at which point demand for copper is sure to ramp up again.”