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.