Antofagasta PLC (LON:ANTO) shares jumped higher this morning after the miner saw its first half profit surge by nearly 90%, lifted by higher copper prices, leading it to boost its interim dividend, and the firm said it is on track to meet annual targets.
The Chilean copper producer reported underlying profit (EBITDA) of US$1.1bn for the six months to June 30, up 87.8% from a year earlier, as revenue jumped by 41.9% to US$2,049bn.
READ: Antofagasta sees first-half production rise 7.1% and keeps full-year cost and output guidance unchanged
Revenue was boosted as realised copper prices increased by 25.3% and sales volumes rose by 14.3%, with the group’s EBITDA margin rising to 52.7%, up from 39.8% a year earlier.
In early trading, Antofagasta shares topped the FTSE 100 leader board, up 3%, or 29p to 983.5p.
In an initial note to clients, Shore Capital analyst Yuen Low said: “H1 2017 financials essentially in-line; we expect H2 2017 numbers to be better on higher production and current prices.”
Commenting on the outlook in its statement, Antofagasta said: “Group copper production for the full year is expected to be between 685-720,000 tonnes as originally announced in January, and cash costs before by-product credits and net cash costs are also unchanged and are expected to be $1.55/lb and $1.30/lb respectively.”
It added: “The outlook in the mid to longer term continues to be favourable as demand is expected to grow at around 2% while supply growth remains constrained. In the shorter term, the market is moving to a tighter demand-supply position with a small deficit expected this year and next.
“However, volatility is anticipated as demand expectations are continually reassessed although supply has stabilised following the spate of disruptions earlier in the year.”
Net debt reduced, dividend boosted
The FTSE 100-listed firm said its group net debt was reduced by US$212.1mln to US$859.6mln, and it is hiking its interim dividend to 10.3 US cents per share, a 232% boost on last year’s first half payout.
Antofagasta’s CEO Iván Arriagada said: “The Company is well positioned for future growth, generating strong cash flows and improving returns against a background of a recovery in copper demand.
“The outlook for Antofagasta is positive - we have the assets, capabilities and strategy to continue to create long-term value for all of our stakeholders."
-- Adds share price, analyst comment --