Fresnillo reports on 'strong' first half

Josh White Sharecast | 01 Aug, 2017 08:24 | | |

minera fresnillo
  • 1,442.00
  • 0.35%5.00
  • Max: 1,448.00
  • Min: 1,422.00
  • Volume: 553,510
  • MM 200 : n/a
17:17 20/09/17
  • 7,271.95
  • -0.05%-3.30
  • Max: 7,289.93
  • Min: 7,249.58
  • Volume: 0
  • MM 200 : n/a
17:19 20/09/17
  • 16,711.14
  • 0.31%52.14
  • Max: 16,713.88
  • Min: 16,468.72
  • Volume: 0
  • MM 200 : n/a
17:19 20/09/17
  • 4,043.45
  • -0.03%-1.33
  • Max: 4,052.07
  • Min: 4,032.65
  • Volume: 0
  • MM 200 : n/a
17:19 20/09/17
  • 3,992.93
  • -0.04%-1.43
  • Max: 4,001.45
  • Min: 3,982.92
  • Volume: 0
  • MM 200 : n/a
17:19 20/09/17

Fresnillo reported some solid numbers in its first half on Thursday, with adjusted revenue rising 11.5% to $1.07bn, while gross profit and EBITDA rose 16.6% and 10.2% respectively to $460m and $522.5m.

The FTSE 100 company said its profit from continuing operations - before net finance costs and income tax - in the six months to 30 June was $377.9m, up 24.2%, while its profit for the period surged 87.2% to $310.1m.

Basic and diluted earnings per share from continuing operations totalled 41.9 cents per share, ahead 84.6%, while its adjusted earnings per share rocketed 200.8% to 36.7 cents.

Fresnillo said it generated $540.3m cash from operations, before changes in working capital, which represented growth of 13.7%, although net cash from operating activities dropped 13.2% to $354.2m.

The company claimed a “strong” balance sheet, with cash, cash equivalents and short-term investments as at 30 June of $884.9m.

On the operational front, silver production was said to be up 11.2% at 28.0 moz, while gold production was “broadly in line” at 446 koz.

“We are pleased to report a strong first half of the year, with silver production up 11% and gold production stable at 446 thousand ounces,” said chief executive Octavio Alvídrez.

“This performance was driven by the successful ramp-up of San Julián (phase I) since its start-up in the second half of 2016 and the operational improvements made at the Fresnillo mine.

“The turnaround plan at the Fresnillo mine continues to progress with ore processed increasing for the fourth consecutive quarter.”

The board said the construction of San Julián phase II was completed on time and on budget, with commercial production having begun mid-July.

It added that the turnaround plan at the Fresnillo mine was continuing to show “good signs” as the volume of ore processed increased for the fourth consecutive quarter.

Fresnillo said it was on track to achieve its 2017 production target of 58-61 moz silver, including Silverstream, along with 870-900 koz gold.

“We completed the construction of San Julián phase II on time and on budget and I am confident that this new mine will be further proof of the effectiveness of our strategy of continued investment in quality growth,” Alvidrez explained.

“We are applying the same disciplined approach to the construction of the pyrites plant in the Fresnillo district and the second line of the dynamic leaching plant at Herradura and expect to commission both projects in 2018.

“We have intensified exploration activities around our mining districts and prioritised areas with the greatest potential. We are confident that these efforts will provide a solid base upon which our future growth will be built.”

Fresnillo’s board declared an interim dividend of 10.6 cents per share, for a total dividend payout of $78.1m.

Octavio Alvidrez said the “solid” operational performance was supported by higher metal prices, delivering good financial results during the period.

The company’s “ongoing commitment” to investing in cost reduction initiatives and efficiency projects was “increasingly relevant”, he added, as some cost pressures in Mexican pesos were starting to be evident after the devaluation of the Mexican peso relative to the dollar.

“We will continue to work on maintaining a competitive cost position and preserve our profit margins.

“Our priorities for the second half of this year are to make further progress to ensure Fresnillo is operating at full capacity as well as the ramp-up of San Julián phase II.

“I am confident that we are well positioned to meet our 2017 production targets and establish the basis for long-term growth as we approach the 10 year anniversary of Fresnillo plc.”

More news

20 Sep US close: Dow, S & P 500 close at session highs as Fed starts QE taper

The Dow Industrials and S & P 500 ended slightly higher even as the US Federal Reserve announced the historic end to its balance sheet expansion, although the Nasdaq was held back by losses in shares of Apple.

20 Sep Results round-up

Kingfisher posted better profits than were expected for the first half of the year but the do-it-yourself retailer remained cautious on the second half backdrop in the UK and France.

20 Sep Broker tips: Nostrum Oil & Gas, Stagecoach, BAE Systems

RBC Capital Markets upgraded Nostrum Oil & Gas to 'outperform' from 'sector perform' saying recent weakness is an opportunity and its discount to peers it set to unwind as it delivers operational milestones.

20 Sep Fortum and E.ON in 'advanced talks' for sale of Uniper stake

Finnish firm Fortum announced on Wednesday that it was in advanced talks with E.ON over the potential €3.76bn purchase of German energy company Uniper.

20 Sep Federal Reserve to start taper in October, nudges rate forecast lower

America's central bank has stuck to script - or almost - announcing it will begin to taper the size of its balance sheet next month while keeping the target for its main policy interest rate unchanged at between 1.0% and 1.25%.

20 Sep Europe close: Spanish stocks underperform

European stocks ended the session little changed amid moderate selling pressure on Spanish stocks on the back of the latest news around the attempted independence referendum in Catalonia and ahead of the US Federal Reserve's policy decision later in the session.

20 Sep Apple discovers issues in new smartwatch 48 hours before shipping

Tech juggernaut Apple announced on Wednesday that its new Series 3 smartwatches had been experiencing significant connectivity issues just days before they were due to be shipped.

20 Sep London close: Strength in Sterling puts a lid on stocks

London stocks traded fairly flat on Wednesday as the pound popped higher on the back of stronger than expected retail sales data, even as traders waited on the US Federal Reserve's policy announcement later in the day.

20 Sep Thursday preview: Capita guidance and UK public sector debt under spotlight

Thursday in Europe will initially see any fallout from the US policy adjustments overnight, while in the UK Capita and Mitchells & Butlers investors have results to pore over, with an update on the public deficit later in the morning.

20 Sep Bed Bath and Beyond fails to meet expectations again

Bed Bath and Beyond (BBBY) shares suffered after the New Jersey-based home goods retailer fell short of market expectations yet again.