Antofagasta Net Profit Rises; Reaffirms Output Guidance-Update
August 25 2015 - 4:55AM
Dow Jones News
By Alex MacDonald
LONDON--Chilean copper producer Antofagasta PLC (ANTO.LN)
Tuesday reported higher net profit for the first half of the year
following the sale of its water division and reaffirmed its revised
full-year output guidance after a delay in the commissioning of its
Antucoya growth project.
The FTSE 100 miner reported net profit of $706 million for the
first six months of the year compared with $331 million in the same
period a year earlier. This included $620 million profit from the
sale of its water division in June for $947 million.
The sale more than offset a 31% drop in revenue to $1.79 billion
due to lower copper prices and volume sales.
Antofagasta's shares are down 27% since the beginning of the
year, making its the sixth worst performer in the U.K's blue-chip
FTSE 100 index. The company has suffered as the price of copper
falls to a six-year low as concerns abound that China, the world's
biggest consumer of the red metal, might buy less if its economy
slows down. Shares were also hit by protests, heavy rainfall, and a
delay in the commissioning of its Antucoya project to the third
quarter, all of which prompted the company to cut its copper output
guidance twice this year.
Nevertheless, Antofagasta's shares rose 3.7% at 552.5 pence a
share on Tuesday, in line with a broader 3.5% recovery in the FTSE
350 mining index following Monday's global stock market rout.
"With our robust balance sheet and cash generative operations we
are well positioned for the current low point in the copper price
cycle," Chief Executive Officer Diego Hernandez said.
Looking ahead, he expects a small supply surplus of about
300,000 tons of copper by the end of this year with demand picking
up in the second half from the first half as China's government
takes measures to boost industrial activity and consumption. The
copper supply-demand balance should tighten further by 2017 as
supply growth fails to keep pace with demand growth.
The company reaffirmed its plan to produce 665,000 tons of
copper this year, down from an earlier estimate of 695,000 tons.
This should pick up in the year ahead due to the ramp up of its
Antucoya project, completion of its $1 billion purchase of a 50%
stake in the Chilean Zaldívar mine by the end of this year, and
expansion of its Centinela concentrates operations.
The miner also reaffirmed this year's revised cash cost guidance
after by-product credits of $1.47 a pound.
Antofagasta declared an interim dividend of 3.1 cents per share,
representing a 35% pay-out ratio of the half-year net earnings. The
company had about $1 billion in net cash at the end of June, of
which $980 million will be spent on the Zaldivar purchase.
It also remains focused on cutting costs, having already
achieved 44% of its targeted $160 million in cost savings for this
year.
Write to Alex MacDonald at alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 25, 2015 04:40 ET (08:40 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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