FRES Fresnillo Plc

--Fresnillo shares trade down after net profit fell 70%

--CEO Octavio Alvidrez said the first-half performance didn't meet expectations

--The company will continue to prioritize cost-reduction initiatives

By Oliver Griffin

Shares in Fresnillo PLC (FRES.LN) fell sharply on Tuesday after the company reported a 70% fall in net profit for the first half of the year and slashed its interim dividend following a disappointing production update earlier in the month.

The FTSE 100-listed precious-metals miner, which has operations in Mexico, made a profit of $70.2 million for the first half of the year, compared with $230 million in the year-earlier period.

"Performance of the business in the first half hasn't met our expectations," said Chief Executive Octavio Alvidrez, adding that the company was committed to working through the short-term issues it faces.

The result was heralded by poor production data earlier in the month. On July 17, Fresnillo's shares fell after the company reported lower gold and silver production for the first half and second quarter of 2019 and cut its full-year guidance range, citing lower-than-expected ore grades and construction delays.

Total revenue for the first half of the year fell 10% to $1 billion, the company said. Cash generated from operations fell to $316.1 million, from $575.9 million in the year-earlier period.

Adjusted production costs, which strips out certain items, rose 32% to $566.4 million over the first half of the year. Fresnillo said the $136.5 million increase was due to higher stripping costs, additional maintenance and a number of other costs. Fresnillo said it will continue prioritizing cost-reduction initiatives and focusing on increasing productivity.

The company lowered its interim dividend to 2.6 cents a share, from 10.7 cents a share the prior year.

Shares at 0820 GMT were down 6.8% at 740.60 pence each.

Write to Oliver Griffin at oliver.griffin@dowjones.com; @OliGGriffin

(END) Dow Jones Newswires

July 30, 2019 05:31 ET (09:31 GMT)

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