Antofagasta Reports Earnings Down 39% But Lifts Dividend By 5%

The shares of Antofagasta (LSE: ANTO) slipped 15p to 900p during early trade this morning after the miner admitted its first-half earnings had slumped 39%.

The FTSE 100 member said its after-tax profits during the six months to June 30 had dropped from $646m to $395m and from $0.65 to $0.40 on a per share basis.

Today’s statement revealed turnover had slipped 12% to $2,777m due to realised copper prices falling about 16% to $3.16 a pound. The top line was supported a little by copper production gaining 8% to 364,100 tonnes during the six months.

Notably, Antofagasta confirmed its net cash position had improved by $167m to $1,507m since the start of the year, and that its first-half dividend would be lifted 4.7% to 8.9 cents per share.

Diego Hernandez, the chief executive of Antofagasta, said:

With new copper supply coming online during the remainder of this year and demand growth largely dependent on the economies of China and the United States, the pricing environment for copper is expected to remain challenging.

Against this backdrop we remain focused on cost control, advancing our current projects and maintaining a strong balance sheet while being alert to opportunities that may arise.

Sr Hernandez also confirmed the miner remained on track to produce 700,000 tonnes of copper for 2013 as a whole.

Doubling up this morning’s profit figure gives annual earnings of roughly 52p per share, which compares to City estimates made prior to today of about 54p per share.

In addition, assuming the full-year dividend advances at the same rate as the interim payout, a 2013 ordinary dividend of almost 9p per share could be on the cards.

Going on those projections, Antofagasta’s shares are valued currently at approximately 17 times potential profits and yield less than 1%.

Of course, whether that valuation, today’s results and the wider outlook for commodity prices all combine to make Antofagasta a ‘buy’ remains something only you can decide.

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> Maynard does not own any share mentioned in this article.