Chilean copper mining group Antofagasta plc has had a strong start to the year. Earnings before interest, taxation, depreciation and amortisation (EBITDA) were up 88% in the first six months compared with the same period in 2016, said CEO Iván Arriagada.
Performance benefited from a combination of increases in the copper price, higher sales volumes and tight cost management, he said. Cash flow from operations is up 48% to US$1.1bn.
This improvement means that Antofagasta's interim dividend is up 232.3% on last year’s in the same period to 10.3 cents per share. Antofagasta has a policy of paying out a minimum of 35% of underlying net earnings.
Strategy remains focussed
“Antofagasta’s strategy remains focussed on producing profitable tonnes through reducing costs, making improvements in productivity and efficiency and the application of innovative solutions,” says Arriagada.
“A disciplined approach to capital allocation underpins our decision-making process. Projects and future developments must compete internally for capital with any excess cash distributed to shareholders.”
A recovery in copper demand means Antofagasta is well positioned for future growth, he adds. The outlook is a positive one. The share price rose 25 pence to 979.50 pence having touched 1002 pence in early trading.
Grounds for optimism, and a caveat
A note from Commerzbank on commodities would appear to provide grounds for that optimism. It says that metals prices only seem capable of moving in one direction just now: upwards. But that comment is accompanied by something of a caveat.