Amid wider weakness in the mining sector Antofagasta (ANTO) notably fared worse than all of its peer group except Anglo American (AAL), the latter down 11.4% to £28.65 as its shares traded without the rights to a generous dividend.
Antofagasta itself fell 5.1% to £13.95 as results revealing record first half earnings were marred by disappointing production guidance.
For the six months ended 30 June, pre-tax profit jumped by $1.40 billion to $1.78 billion year-on-year as revenue climbed 67.9% to $3.59 billion.
The revenue was driven by higher realised copper prices, though partially offset by a decrease in the volume of copper sales, the company said.
Copper production in the first six months of the year was 361,500 tonnes, in line with expectations and 2.8% lower than in the same period last year mainly because of lower grades.
An interim dividend of 23.6 cents per share was declared, up 280.6% on last year's interim.
PRODUCTION ISSUES
Looking ahead, output guidance was cut to a range of 710,000 to 740,000 tonnes from 730,000-to-760,000 tonnes previously, citing adverse weather conditions.
‘This year has been the driest of a 12-year drought in Chile. Given the traditional rainy season runs from June to September, it is looking increasingly likely that the low levels of precipitation will continue until at least the Southern Hemisphere winter next year,’ the company said.
AJ Bell investment director Russ Mould says: ‘The fear for the market will be the situation could get worse given the unpredictability surrounding what will happen next amid 12 years of drought like conditions in Chile.
‘More encouragingly for the long term is that a robust appetite for copper is also a key reason for the metal’s strength.
‘Because copper is central to the production of renewables and electric vehicle kit and infrastructure, the anticipated growth in these areas, as countries look to reduce their emissions, is underpinning optimistic demand forecasts over the coming decades.’
