Proactive Investors - Run By Investors For Investors

Record production can't hide drop in revenues, earnings and dividends from Antofagasta

Overall, the FTSE 100-listed firm produced 725,300 tonnes of copper last year, however, realised copper prices were on average 6% lower than they were in 2017 and that fed through into lower revenue
Copper plates
The miner cut its 2018 dividend by 13.9% to US$0.43.80 but that was higher than expected

Antofagasta PLC's (LON:ANTO) chief executive, Iván Arriagada opened his full-year results commentary in an upbeat tone by highlighting that 2018 was a record production year for the company.

Overall, the FTSE 100-listed firm produced 725,300 tonnes of copper last year. However, realised copper prices were on average 6% lower than they were in 2017 and that fed through into lower revenue, down 0.3% at US$4.7bn, and a fall in earnings per share, down 28% to US$0.55.

READ: Antofagasta posts strong rise in 2018 copper production to record levels, forecasts another record year

The company blamed higher unit costs and lower grades at its copper mines, while net debt was 31% higher at US$596mln, and operating cash flow rang in at US$1.9bn.

It said production in 2019 is expected to be between 750,000 and 790,000 tonnes of copper, as well as between 240,000 and 260,000 ounces of gold and between 11,500 and 12,500 tonnes of molybdenum. Copper production is expected to grow as grades improve at all operations but particularly Centinela Concentrates.

The group cuts its 2018 dividend by 13.9% to US$0.43.80.

In a note to clients, however, analysts at RBC Capital pointed out that the dividend was higher than expected and noted that Antofagasta is “effectively pushing through non-core asset proceeds to investors which should be taken positively.”

They also said: “The decision on Centinela is interesting in our view as the company has chosen to push forward a second concentrator for 180ktpa incremental production rather than expand the current one.

“This will provide more growth but we would expect to come with a higher capex charge from 2020 onwards.”

RBC reiterated a ‘sector perform’ rating and 850p target price on Antofagasta, having downgraded its rating from ‘outperform’ on 12 March.

In afternoon trading, Antofagasta shares were 3.2% at 969.20p.

View full ANTO profile View Profile

Antofagasta PLC Timeline

Related Articles

A Western Australian map showing company projects
March 19 2019
Geologist and finance professional Ian Stuart became the company’s chairman last month.
EV being charged in European city
March 03 2019
Drilling, metallurgical test work and pilot processing for the Wolfsberg DFS are on the company’s agenda in 2019.
Gold mining project development operations at West Wits Mining
April 08 2019
Sixty per cent of Mt Cecelia project’s boundaries are surrounded by Rio Tinto, which has upped its landholding in the region by 1,000%.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use