FTSE 100 copper miner Antofagasta (ANTO) has reported half year results that saw 19% growth in revenue and a 44% rise in earnings before interest, tax, depreciation and amortisation (EBITDA).

EBITDA of $1.3bn was reported on $2.52bn revenue, while the group also managed to slash $78.9m off net debt, to $517.4m.

The company also confirmed that it remains on track for record copper production of between 750,000 and 790,000 tonnes, with higher production at all of its mines.

That appears pretty reassuring given current concerns about a slowing global economy, which would surely mean lower raw materials demand.

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This may explain why shares in the Chile-based miner dipped 0.7% this morning to 813p, having opened 2% down.

A lower than expected interim dividend of $0.107 per share won't help the mood but an underlying earnings miss seems to be another significant drag on the mood.

Antofagasta reported underlying earnings of $302m. This was far higher than last year's $194.3m equivalent but 15% below forecast, according to BMO analyst Edward Sterck, reflecting higher depreciation and taxes.

CAUTIOUS ON COPPER

The firm also sounded a cautious note on the outlook for the copper market going forward, with chief executive Ivan Arriagada warning that it remains uncertain due to the protracted negotiations between the US and China impacting global trade.

Its better volumes of copper produced and sold compared to last year helped mask a 6% decline in the metal’s price, something which is expected to continue for the rest of the year.

But Arriagada added that Antofagasta continues to be in a ‘strong position generating solid cash flows and improving returns’, something which overall the market appears to agree with.

ANTOFAGASTA 'BEST POSITIONED IN EUROPE'

BMO's Sterck said the company is the ‘best positioned’ pure play copper miner listed in Europe.

He added, ‘It does always screen as being relatively expensive vs. peers, but this reflects the strong balance sheet, the quality of the assets and operational performance, and the consistently high shareholder returns over time.’

Sterck said the company is in ‘growth mode’, and the expansion of its Los Pelambres mine could take Antofagasta’s copper production to 1m tonnes by 2024.

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Issue Date: 22 Aug 2019