FTSE 100 winners and losers: ditching Coke for Chile

Both companies delivered dividend growth, but Coca-Cola clearly wasn’t the Real Thing as far as investors were concerned today.

Dividend growth at Antofagasta (LSE:ANTO) and Coca-Cola (LSE:CCH) brought a mixed response today as investors cheered another mining windfall but dumped the European bottling giant.

The pair were at the opposite ends of the FTSE 100 index in the wake of their annual results, with Chile's Antofagasta trading 2% higher after doubling its dividend and Coca-Cola HBC down 5% despite improving its payout ratio.

Antofagasta's rally means the stock has rebounded by as much as 17% in the past couple of weeks, whereas Coca-Cola HBC is now back where it was a year ago.

The miner reaped the benefit of strong copper prices to grow underlying earnings by 77% to a record $4.8 billion (£3.5 billion) last year, despite challenges around Covid-19 and a 12-year drought affecting its operations in central Chile.

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Antofagasta declared a final dividend of 118.9 cents a share, which amounts to $1.2 billion (£890 million) and will be paid to shareholders on 13 May. It brings the total for 2021 to 142.5p, representing a jump of 160.5% and the equivalent of 100% of underlying earnings per share.

Earlier this month, former FTSE 100 stock BHP (LSE:BHP) produced a record half-year dividend worth $7.6 billion (£5.6 billion) and Rio Tinto (LSE:RIO) is expected to deliver more eye-watering returns tomorrow.

According to the Sunday Times, the Anglo-Australian mining giant will unveil one of the largest dividends in UK corporate history in its annual results, amounting to a total dividend of about $10.20 a share, worth the equivalent of $16.5 billion (£12.2 billion).

Miners reaped the benefit of soaring commodity prices in 2021, with a pandemic recovery in demand from China boosting iron ore prices earlier in the period and cobalt and nickel benefiting from ongoing demand for key battery components.

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Antofagasta noted that copper reached an all-time high of $4.86/lb in May before settling in a range above $4.20/lb, where it has continued to trade into 2022.

It said today: “The outlook for copper remains positive, thanks to the continued decarbonisation of industrial activity and the growth of the clean energy sector and electromobility. Demand is expected to grow more slowly during 2022 than in 2021, but still at a high rate of about 2.5%-3%, requiring an additional 600 to 700,000 tonnes of refined copper per year.”

Antofagasta said production this year is expected to be 660,000-690,000 tonnes of copper, compared with 721,500 tonnes in 2021, while it has forecast a drop in gold output to 170,000-190,000 ounces from 252,200 last year.

The decline in copper and gold production partly reflects reduced water usage at its flagship Los Pelambres mine until a desalination plant is finished later in 2022. By 2025, Antofagasta expects that 95% of its usage will come from desalinated sea water or recycled water.

Today's fall in shares for Coca-Cola HBC came despite an improvement in its dividend payout target to between 40% and 50% of net profit, from 35%-45% previously.​​​​​​​

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The move, which reflects the board's confidence in the long-term outlook for the business, means a full-year dividend of 71 euro cents (59.5p) per share, up 11% year-on-year.

Net profit today rose 32% to 547.2 million euros (£458.4 million) as volumes rose 13% and revenues jumped 16.9% to 7.1 billion euros (£6 billion). However, investors noted that the growth failed to keep pace with the results of other distributors, including Coca-Cola Europacific.

Its shares are also likely to have been impacted by uncertainty in eastern Europe, particularly as sales in Russia and Ukraine helped to drive strong momentum in its emerging markets division during 2021. Credit Suisse today cut its Coca-Cola HBC target price to 2,950p but continues to have an 'outperform' recommendation.

As a partner of Coca-Cola Company, the company bottles, sells and distributes the world’s most recognised soft drink along with Sprite, Fanta and other sparkling, juice and energy drinks.

Selling more than 2.4 billion cases every year, the business has operations in 29 countries including Ireland, Greece and Nigeria. The company is rarely in the limelight despite being among the 60 largest stocks on the FTSE 100 index.