2017 Half Year Financial Report
Strong First Half
Antofagasta plc CEO Iván Arriagada said: “Antofagasta has had a strong first half year, with EBITDA up 88% versus HY 2016. Our performance benefited from increases in the copper price, higher sales volumes and tight cost management. As a result, EBITDA margins have returned to over 50% and cash flow from operations is up 48% to $1.1 billion.
“This better performance means the Company’s interim dividend has significantly increased compared to last year to 10.3 cents per share with the Company’s policy of paying out a minimum of 35% of underlying net earnings unchanged.
“Antofagasta’s strategy remains focused on producing profitable tonnes through reducing costs, making improvements in productivity and efficiency and the application of innovative solutions. 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.
“The Company is well positioned for future growth, generating strong cash flows and improving returns against a background of a recovery in copper demand. The outlook for Antofagasta is positive – we have the assets, capabilities and strategy to continue to create long-term value for all of our stakeholders.”
HY 2017 financial performance compared with HY 2016
- Revenue 41.9% higher at $2,049 million, as realised copper prices increased by 25.3% and sales volumes increased by 14.3%
- EBITDA(1) increased 87.8% to $1,079.8 million mainly due to higher revenues
- EBITDA margin(2) strengthened to 52.7%, up from 39.8% in the same period last year and 44.9% for the full year 2016
- Operating cost reductions of $44 million achieved, as part of the Costs and Competitiveness Programme, contributing to savings of $0.06/lb in cash costs during the current period
- Operating profit and net earnings per share rose by 149.9% and 231.5% respectively
- Operating cash flow generation of $1,147 million in the period, up 48.2%
- Capital expenditure of $410.0 million, 46% of full year guidance
- Group net debt reduced by $212.1 million to $859.6 million, since the end of 2016 reducing Net Debt/EBITDA to 0.4 times or 0.2 times if subordinated shareholder loans are excluded
- Interim dividend of 10.3 cents per share, a 232.3% increase on last year’s interim dividend and equivalent to a payout ratio of 35%.
HY 2017 operating performance compared with HY 2016
- Group copper production is 7.1% higher at 346,300 tonnes, due to increased production at Centinela and Antucoya
- Group cash costs before by-product credits fell by 2.5% to $1.56/lb, primarily due to higher production and cost savings achieved from the Cost and Competitiveness Programme
- Group net cash costs were 1.6% lower at $1.24/lb, reflecting lower cash costs before by-product credits and higher by-products credits
- Group copper production for the year is expected to be between 685-720,000 tonnes as guided in January and unit costs for the full year are unchanged with cash costs before by-product credits expected to be $1.55/lb and net cash cost of $1.30/lb
- Capital expenditure guidance for the full year unchanged at $900 million
- Labour negotiations successfully concluded at Centinela and Zaldívar
- Encuentro Oxides project ramp-up will begin in the second half of the year
|UNAUDITED RESULTS SIX MONTHS ENDING 30 JUNE||2017||2016||%|
|Earnings per share||cents||29.5||8.9||231.5|
|Dividend per share||cents||10.3||3.1||232.3|
|Cash flow from operations(3)||$m||1,147.1||774.1||48.2|
|Group net debt at period end||$m||859.6||1,039.6||(17.3)|
|Average realised copper price||$/lb||2.72||2.18||25.3|
|Copper sales – included in Revenue(4)||kt||309.8||271.1||14.3|
|Cash costs before by-product credits(1)||$/lb||1.56||1.60||(2.5)|
|Net cash costs(1)||$/lb||1.24||1.26||(1.6)|
Note: The financial results are for continuing operations (i.e. excluding Michilla from 2016) and are prepared in accordance with IFRS, unless otherwise noted below.
(1) Non-IFRS measures. Refer to the alternative performance measures in Note 21 to the half-yearly financial report below.
(2) Calculated as EBITDA/Revenue. If Associates and JVs’ revenue is included EBITDA Margin was 48.3% in HY 2017 and 36.0% in HY 2016.
(3) From continuing and discontinued operations.
(4) Excludes 25,600 tonnes of sales by Zaldívar in HY 2016 and 24,300 tonnes in HY 2017, 11,400 tonnes of pre-commercial production sales by Antucoya and 900 tonnes of sales by Michilla in 2016.
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