Antofagasta (LON:ANTO)
Antofagasta (ANTO LN) has released strong earnings results as despite a significant decline in revenue EBITDA gained YoY. Net income was marginally lower YoY. Despite a 7% increase in copper production and sales volumes to 323kt and 309kt respectively, weaker average copper prices alongside lower gold production resulted in an 18.5% decline in revenue YoY to US$1,448m.
Group EBITDA was, however, up 2.3% to US$572m as operating costs fell significantly with group cash costs before by-product credits down 15% YoY to US$1.6/lb and net cash costs down 18% YoY to US$1.26/lb. Higher production alongside a weaker Chilean peso was the key driver for the strong cost control. Although operating margins were stronger, net earnings were marginally lower and EPS declined marginally by 3% YoY to US$8.9c/sh.
Production guidance for the full year has been maintained at 710-740kt with production weighted to H2 2016 as capital projects are completed. Consequently, capital spending is also weighted to H2 with just US$43m spent in H1 of a guided US$185m for the full year. An interim dividend of US$3.1c/sh. was declared.
BHP Billiton (BLT LN) has as expected delivered weak results following previously announced weak production numbers. Group revenue declined 31% YoY to US$30,912m largely due to weaker commodity prices although lower petroleum production and extended grade problems at Escondida resulted in disappointing copper production.
Group EBITDA of US$12,340m was down 44% YoY largely due to the weaker top line. Iron ore’s importance increased with the segment contributing 45% of group EBITDA versus 40% in 2015. Copper, coal and petroleum’s contribution declined marginally. Net income swung to a loss of US$6,385m from a profit of US$1,910m in the prior year. This was largely due to weaker operating margins. The net financial impact of the Samarco incident was US$2.2b.
Capital expenditure was down 42% YoY to US$6,946b as part of BLT’s cost cutting programme. Net debt was largely unchanged at US$26.1bn from December 2015. The final year dividend was US$14c/sh.