The Chilean mining giant’s half-year numbers were not as bad as they could have been due to higher realised gold prices and lower operating costs due to the weaker Chilean peso, along with lower input costs and continued tight cost control.
Revenue for the first half of 2020 of US$2.14bn was down 15.3% compared to a year ago, while profit before tax plunged 49% to US$387.5mln.
Underlying profit (EBITDA) of US$1.013bn was roughly in line with the consensus forecast of US$1.02bn.
Positive surprises were the much lower net debt of US$320mln, decreased by $244mln during the period, along with an interim dividend of 6.2 cents per share, which the board said was consistent with its policy of paying out a minimum of 35% of underlying net earnings but came after the final dividend was cut in May after a management U-turn.
Chief executive Iván Arriagada pointed to a strong operating and cost performance, with sales volumes falling 2% year-on-year, and a 6% improvement in net cash costs, aided by cost savings of US$78mln.
He said two major growth projects of Los Pelambres phase 1 and the Zaldivar chloride leach are both roughly six months behind schedule following the COVID-19 restrictions, though maintenance and development work on its operating mines work has restarted.
The shares fell 2% to 1,120.5p in early trading on Thursday.
Analysts at Peel Hunt said there would be some disappointment that the capital budget for the Los Pelambres project will increase by US$200mln partly on the delays but also due to a scope change at the desalination plant.
But this was balanced by a “much more generous dividend than we had expected - triggered we suspect by the substantial fall in net debt”.