Why Shares In Hochschild Mining Plc Plummeted

Hochschild Mining Plc (LON: HOC) suspends dividend on falling revenue.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

SilverWhat: Shares in the the Latin America based mining company Hochschild (LSE: HOC) dived 11% to 177p during early trading this morning, after the publication of its annual results which revealed revenue slumped by almost 25%. Because of this the full year dividend was suspended.

A steep decline in precious metals prices in 2013 saw revenue fall to $622m from $818m a year earlier.

In the last 12 months shares in Hochschild are down nearly 50%.

So what: The firm has admitted that, in the short term, the outlook for the precious metals markets “remains uncertain”.

Analysts had previously penciled in a dividend per share of 4.25p, and should the dividend be resumed at previous levels in 2014, at today’s share price it would yield 2%.

The chief executive, Ignacio Bustamante, offered:

“In 2013, Hochschild reacted quickly to a very negative market environment by initiating a wide-ranging cost savings programme to preserve the Company’s operating profitability and, whilst maintaining production levels, capitalised on a weak market environment to consolidate our ownership in our most valuable assets.”

Now what: As part of the cost-cutting effort a 30% cut in salary was imposed for the chairman and non-executive directors, while the chief executive’s salary was cut by 10%.

The company is commencing production increases with the aim of reaching 35 million silver equivalent ounces by 2017.

Of course, whether tightening the purse strings is enough, and the firm’s operational expertise can see the firm return to growth in the long term, remains to be seen.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark does not own shares in Hochschild.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »