TOP NEWS: Worst of 12-year drought in Chile hits Antofagasta outlook

(Alliance News) - Antofagasta PLC on Thursday posted a sharp first-half earnings hike, helped by ...

Alliance News 19 August, 2021 | 8:47AM
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(Alliance News) - Antofagasta PLC on Thursday posted a sharp first-half earnings hike, helped by copper prices hitting "multi-year highs" as major economies began re-emerging from the worst of the Covid-19 pandemic.

The Chilean miner substantially lifted its payout as a result, though it did also lower output guidance for the whole of 2021 due to a terrible drought in the country.

Antofagasta shares were 4.3% lower at 1,408.00 pence each in London on Thursday morning.

In the six months to June 30, pretax profit spiked to USD1.78 billion from USD387.5 million a year before. Revenue surged 68% year-on-year to USD3.59 billion from USD2.14 billion.

In addition, earnings before interest, tax, depreciation and amortization jumped to a record USD2.36 billion from USD1.01 billion a year earlier.

Copper sales volume slipped 6.3% to 325,100 tonnes, and gold sales fell 4.3% to 103,700 ounces, but the firm's realised copper price jumped 80% to USD4.42 per pound while the gold price increased to USD1,776 per ounce from USD1,680 a year before. One pound is equal to 16 ounces.

The boosted earnings meant Antofagasta lifted its payout markedly to 23.6 cents per share, from 6.2 cents a year earlier. For both periods, the dividends were equal to a payout ratio of 35% of underlying net earnings.

Antofagasta's cash flow from operations grew to USD2.46 billion from USD906.9 million

"We have seen strong copper demand and prices at multi-year highs over the first half of this year which has contributed to the robust financial performance of the group," Chief Executive Ivan Arriagada said.

"Our key growth projects are on track, and we remain focused on operating discipline and cost control, while producing copper responsibly and sustainably for all our stakeholders," Chief Executive Ivan Arriagada said.

The company also noted it is on track to reach its USD100 million savings target for the full year.

Copper production in the first half was 361,500 tonnes, down 2.8% annually, but in line with expectations.

The company noted the driest year of a 12-year drought in Chile will hurt production in the second half. The miner lowered its full-year outlook for copper production to be between 710,000 to 740,000 tonnes versus previous guidance of 730,000 to 760,000.

The drought also could hurt output next year, Antofagasta warned.

"Next year's mine plans are being prepared and group production guidance will be released, as usual, in the Q3 production report. Different weather and associated operating scenarios are being evaluated. However, if there is no precipitation until the next rainy season and when the desalination plant comes into operation in H2 2022, preliminary estimates are that up to approximately 50,000 tonnes of production could be at risk at Los Pelambres in 2022," the miner explained.

By Eric Cunha; ericcunha@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Antofagasta PLC 1,400.50 GBX 3.24 -

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