Copper mining company Antofagasta Plc (ANTO.L) Wednesday reported a sharp decline in first-half profit as group turnover plunged from last year, mainly due to lower metal prices. Looking ahead, the company raised its copper output forecast for 2009, while lowering its molybdenum production outlook.
Profit for the period attributable to equity holders of the company slumped to US$235.7 million from US$792.8 million in the year-ago period. Basic earnings per share were 23.9 cents, lower than last year's 80.4 cents.
Profit for the financial period plunged to US$389.3 million from US$1.225 billion last year. Profit before tax dropped to US$476.6 million from US$1.657 billion in the same period a year ago.
Group turnover for the first half was US$1.178 billion, sharply lower than US$2.407 billion generated in the prior year period.
The Group has eight reportable segments - Los Pelambres, El Tesoro, Michilla, Esperanza, Exploration, Railway and other transport services, Water concession, Corporate and other items.
Los Pelambres reported first-half revenues of US$803.4 million, a significant drop from US$1.730 billion reported last year. At El Tesoro, revenue dropped to US$185.3 million from US$385.7 million in the previous year. Michilla generated US$81.6 million in revenues in the latest half-year, compared to US$174.3 million last year.
Rail and road volumes in the first half of 2009 were 3.1 million tons and 0.7 million tons, respectively, compared to 2.6 million tons and 0.6 million tons, respectively, in 2008.
The company noted that metal prices during the first six months of 2009 improved substantially, compared to the beginning of the year, but remained well below the 2008 comparative period.
Copper concentrate revenues declined to US$718.4 million from US$1.436 billion, while Copper cathode revenues slipped to US$185.3 million from US$385.7 million reported last year. Revenue from molybdenum plunged to US$69 million from US$267.3 million. Silver revenues were US$7.4 million, compared to US$13.7 million last year and revenue from gold was US$8.6 million, lower than US$13 million reported last year.
Copper production for the first half was 218,200 tonnes, 6.6% below the first half of 2008, mainly due to expected lower ore throughput at Los Pelambres. Group molybdenum production was 3.7 thousand tonnes compared to 3.8 thousand tonnes last year.
The Group's average realised copper price decreased by 44.7% to 226.6 cents per pound from last year's 409.4 cents, mainly reflecting the 50.1% decrease in the average LME copper price to 183.5 cents per pound.
The realised molybdenum price decreased by 71.1% to US$9.7 per pound in the first half of 2009, compared to a 72.5% decrease in the average market price to US$9.1 per pound.
Operating costs declined to US$683.4 million from US$767.1 million. The company operates three mines in Chile.
The Board declared an interim dividend of 3.4 cents per share for 2009. It is to be paid on October 8 to shareholders on the register on September 18.
Looking ahead, group copper production for 2009 is expected to be about 447,000 tonnes, compared to the forecast of 433,000 tonnes given at the beginning of the year, with higher expected production at Los Pelambres and Michilla offsetting a small shortfall at El Tesoro due to the delayed start-up of the ROM leaching project.
Molybdenum production at Los Pelambres is expected to be nearly 7,200 tonnes, compared to an original forecast of 8,100 tonnes, mainly due to the decision to maximise copper production at the mine.
Marcelo Awad, Chief Executive Officer of Antofagasta Minerals, said, "Commodity prices have improved strongly since March this year and whilst the short-term outlook remains uncertain, both copper and molybdenum prices appear to have found higher support levels at this time."
Further, the company said that expansion at the Los Pelambres mine, the company's largest, is on schedule and would be complete by the end of 2009. The Esperanza project continues on schedule with first production expected by the end of 2010.
ANTO.L is currently trading at 769.50 pence, down $20.00 or 2.53%, on 199,940 shares.
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