Fresnillo 1st Half Profit Falls on Silverstream Revaluation, Market Headwinds -- Update
July 31 2018 - 6:58AM
Dow Jones News
(Updates with details on revaluation, headwinds.)
By Oliver Griffin
Fresnillo PLC (FRES.LN) said Tuesday that first-half net profit
fell 25%, citing the impact of a negative revaluation of its
Silverstream contract, foreign-exchange headwinds and lower silver
prices.
The precious-metals miner, which has operations in Mexico, said
net profit for the six months ended June 30 fell to $230.0 million
from $308.7 million in the year-earlier period.
Pretax profit declined 17% to $323 million, dragged down by the
negative revaluation of Fresnillo's Silverstream contract. The
company said Silverstream booked a $21.8 million valuation loss
following a decision to increase its reference discount rate to be
in line with the London Interbank Offered Rate, or Libor.
Fresnillo said it booked an $11.8 million foreign-exchange loss
due to the marginal devaluation of the Mexican peso against the
U.S. dollar. This compared with a $3.8 million foreign-exchange
gain in the first half of 2017.
Also contributing to the profit decline was the average realized
price of silver, which fell 5.5% to $16.5 an ounce from $17.4 an
ounce over the period.
Revenue for the half rose 12% to $1.12 billion, Fresnillo said.
It raised its interim dividend by 0.9% to 10.7 cents a share.
Last week, Fresnillo shares dropped after it posted
softer-than-anticipated silver production for the second quarter,
and lowered its full-year silver production guidance to a range of
64.5 million to 67.5 million ounces.
Fresnillo reiterated its silver production guidance of between
65.5 million ounces and 67.5 million ounces, down from the 67
million to 70 million ounces it had expected before posting
second-quarter results last week. Gold production guidance for the
year was reiterated at 900,000 ounces to 930,000 ounces, from
870,000 ounces to 900,000 ounces previously.
The company kept its overall production guidance in
silver-equivalent ounces unchanged.
Write to Oliver Griffin at oliver.griffin@dowjones.com
(END) Dow Jones Newswires
July 31, 2018 06:43 ET (10:43 GMT)
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