Earnings disappoint at Antofagasta

13th Mar 2012 07:13

Antofagasta boasted of another year of record revenues, profits and output in 2011 but the market was largely unimpressed by the figures from the Chilean copper miner which parted company earlier this month with its Chief Executive Officer.The shares retreated in early trading on Tuesday after the release of the figures with analysts concerned that post-tax profits of $1.24bn, while up on 2010's $1.05bn result, were below the $1.26bn the market had been expecting. Group revenue rose 32.7% to $6.08bn - a record figure for the group - from $4.58bn the year before. Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 32.1% to $3.66bn from $2.77bn in 2010. Earnings per share climbed 17.5% to 125.4 cents from 106.7 cents a year earlier. Earnings per share (excluding exceptional items) were 139.7 cents in 2011, compared with 100.6 cents in 2010. The total dividend for the year is 44 cents per share, comprising a special dividend of 24 cents per share and an ordinary dividend of 20 cents per share (final - 12 cents, interim - 8 cents).Net cash at the end of the year had dipped 15.3% to $1.14bn from 1.35bn at the end of 2010.Group copper production during 2011 hit a new high of 640.5m tonnes, up 22.9% on 2010's output of 521.1m tonnes. During the year the average price of copper on the London Metal Exchange (LME) rose by 16.9% to 399.7 cents per pound from 342.0 cents per pound the year before. At the same time, the cost to Antofagasta of digging the stuff out of the ground actually fell, once you factor in by-product credits; weighted average cash costs declined by 2.0% to 101.9 cents per pound from 104.0 cents the year before.After a year of record output, further production growth is forecast for 2012, with expected production of around 700,000 tonnes of copper, 280,000 ounces of gold and 11,000 tonnes of molybdenum. The increase in the copper and gold production reflects the first full-year of operation at the Esperanza asset following the completion of the main ramp-up activities. "The ramp-up of Esperanza was the key milestone for the group in 2011, contributing 90,100 tonnes in its first year of production," reported Jean-Paul Luksic, who is the Chairman of Antofagasta and also acting temporarily as the Chief Executive Officer following the abrupt departure of Marcelo Awad on March 7th. There had been speculation that Awad's shock departure had been prompted by unhappiness at the slow rate of progress on the group's flagship Esperanza copper-gold project. Luksic touched on the problems at Esperanza in his statement. "Nevertheless, as we have reported, production was lower than originally anticipated as a result of which group production was below the original forecast of 715,000 tonnes of copper and 324,000 ounces of gold. We have made significant progress during 2011 in addressing the challenges we have faced at Esperanza during the ramp-up, with remaining remedial measures relating to the performance and reliability of the plant under review," Luksic said.Looking ahead, Luksic predicted that macro-economic uncertainty means that copper prices in the short-term are likely to remain volatile. "Nevertheless, long-term market fundamentals remain positive for copper, with inventories remaining at low levels by historic standards. Our continued production growth from our portfolio of low-cost assets, and our strong financial position, mean that we are well placed to make the most of these conditions," Luksic declared.The market was taking a more short term view of Antofagasta's prospects, and marked down the shares by 45p to 1,225p in the first two hours of trading. jh