By Christian Moess Laursen
Antofagasta is scheduled to report results for 2023 on Tuesday. Here is what to know.
REVENUE: The Chilean copper miner is expected to report $6.30 billion in revenue for the year, based on a consensus polled by FactSet of fifteen analysts’ forecasts. This would be a 7.4% increase from 2022’s $5.86 billion.
EBITDA: Earnings before interest, taxes, depreciation and amortization is forecast by consensus to be $3.0 billion for 2023, which would be a slight rise on the prior-year’s $2.93 billion.
PRETAX PROFIT: The FTSE 100-listed company’s is expected to book a pretax-profit decline, with $1.72 billion versus $2.56 billion in 2022. The prior-year’s figure was boosted by a $944.7 million one-off gain after the company exited a project in Pakistan.
Shares in Antofagasta have surged since mid-November after output disruptions in major copper-producing South American countries boosted prices for the red metal. This was further fueled when peer Anglo American cut its copper outlook for the coming years. Through 2023, shares of Antofagasta climbed 8.7%, outperforming peers as well as the FTSE 100 index. Shares are currently valued 1,766.50 pence.
WHAT TO WATCH
–While the financial results are unlikely to differ significantly from consensus, Antofagasta should give more clarity on the funding of the Centinela mine expansion, which is a key point of concern for investors, Citi analysts say in a research note. Market consensus is that the $4.4 billion budget for the project will leave very little free cash flow for investors, they say. “We believe Antofagasta could part-fund the project through sale of infrastructure assets, without having any adverse impact on the unit costs.” The expansion, which entails the construction of a second concentrator plant, was approved by Chilean authorities in December, and is expected to add 170,000 metric tons copper to the yearly output.
–Antofagasta said in December it had bought a 19% share in Peruvian mining company Compania de Minas Buenaventura, with talks over a collaboration pact already underway. In a research note from last month, Peel Hunt analysts said it appears unclear what Antofagasta’s intentions are, other than to potentially partner with Buenaventura on longer-term copper projects. “Previous forays didn’t end well, so investors will be keen to understand management’s plan for the stake,” the analysts said. Likewise, Morgan Stanley analysts advised investors in a note from January to look for commentary around strategic benefits of acquiring the stake.
–Declines in earnings forecasts over last six months and a modest acceleration of capital expenditure have already moderated the expectations for cash returns across the mining sector, Citi analysts say. Analysts at Morgan Stanley are expecting Antofagasta to declare a full-year dividend of 63.6 cents, which compares with 59.7 cents a year prior.
Write to Christian Moess Laursen at [email protected]
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