Shares in miner Antofagasta (ANTO) have slid 5.5% to 900.6p after its earnings and dividend payout in the first half of 2018 missed expectations amid trade war tensions.
Earnings before interest, tax, depreciation and amortisation fell 16.2% to $904.2m, missing consensus forecasts of $979m by 8%.
Higher costs of sales and exploration dragged on earnings according to the miner.
Broker Canaccord Genuity’s Tim Huff says earnings performance is not the only source of disappointment with the $0.068 per share payout significantly lower than the forecast $0.12 per share.
He believes further earnings downgrades could be in the pipeline if things don’t improve.
AJ Bell investment director Russ Mould agrees if the miner cannot deliver on a better second half by cutting costs and boosting output, the share price could continue its downward spiral.
CASH FLOW DOWN, DEBT UP
In the first half of 2018, operating cash flow - declined to $37m, helping to push net debt higher.
Overall net debt has soared by nearly 70% from $460.5m to $781.2m, which was also blamed on increased taxes and the payment of last year’s dividend.
Investors should not be concerned about future dividends being paid out of debt as free cash flow for 2018 is forecast to hit $800.2m, which is plenty to cover the payout of $473.9m.
