ii view: copper miner Antofagasta reports surging profits

First-half results to 30 June

• Revenue up 29% to $3.8 billion (£2.7 billion)
• Adjusted profit (EBITDA) up 60% to $2.23 billion
• Profit before tax and including exceptional items up 63% to $1.16 billion
• Interim dividend up 110% to 16.6 US cents per share
• Net debt up 40% since late December to $2.28 billion

Guidance:

• Continues to expect full-year 2025 production of between 660,000 to 700,000 tonnes 
• Continues to expect full-year 2025 capital expenditure of around $3.9 billion

Chief executive Iván Arriagada said:“The robust financial performance announced today reflects our operating discipline. Our growth programme continues to advance at Los Pelambres and Centinela, with capital investment expected to increase in the second half, and work on schedule to position Antofagasta as one of the highest copper growth companies among our pure-play peers. 

“We remain committed to our consistent and disciplined approach to capital allocation, and the interim dividend announced today reflects our confidence in the business and our ongoing commitment to delivering a balance of sustainable shareholder returns and investments in growth.”

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ii round-up:

Antofagasta (LSE:ANTO) today detailed profits marginally ahead of City forecasts with expected annual capital expenditure or investment aimed at increasing production staying unchanged at $3.9 billion. 

An 11% year-over-year increase in copper production to 314,900 tonnes and a 3% increase in average prices pushed first-half revenues up 29% to $3.8 billion. That, and a continued focus on costs, left adjusted profit (EBITDA) up 60% to $2.23 billion. Analysts had expected profits of $2.18 billion. 

Shares for the FTSE 100 company rose 1% in UK trading having come into these latest results up by a third so far in 2025, around 3% over the last year. That’s similar to gold producer Hochschild Mining (LSE:HOC). The FTSE 100 index is up 11% over that time. 

Antofagasta owns major stakes in and operates four copper mines in Chile. Management continues to expect full-year 2025 production of between 660,000 to 700,000 tonnes – potentially up from 2024’s 664,000 tonnes and 2023’s 661,000 tonnes. 

Adjusted earnings up 112% to 47.4 US cents, and aided by reduced tax, helped push a payout policy of 35%, leaving the interim dividend up 110% to 16.6 US cents per share. 

Group net debt rose 40% since late December to $2.28 billion, although with the ratio of adjusted profits (EBITDA) to net debt only increasing to 0.54 times from 0.48 times in late December. 

Broker UBS reiterated its ‘buy’ rating on the shares post the results. A third-quarter production update is scheduled for 23 October. 

ii view:

With operations across Chile, Antofagasta employs around 8,000 people. Highlighting itself as one of the world’s largest pure-play copper producers, the FTSE 100 company has a mineral resource base of more than 21 billion tonnes, including more than six billion tonnes and five billion tonnes at its Los Pelambres and Centinela operations respectively. Geographically, Japan accounted for its biggest slug of sales during 2024 at almost 30%, followed by China at around one-fifth, and the US at 7%.   

For investors, outlook uncertainty caused by US trade tariffs and ongoing property-related challenges for China’s economy are not to be ignored. Anto’s concentration on copper contrasts with the diversity of commodities produced at other miners such as Glencore (LSE:GLEN). A share price to estimated net asset value above the three-year average may suggest the shares are not obviously cheap, while currency risks, given that commodities are priced in US dollars, Chilean operations and a pound sterling share price are a constant consideration.

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For the positives, a 17% rise in copper sales volumes year-over-year appears to point to robust demand for this widely used metal. The ongoing construction of a Second Concentrator at its Centinela operation is expected to offer a pathway to grow output by more than 30% over the medium term. The balance sheet remains robust with a net debt to adjusted profit (EBITDA) ratio sat at 0.54 times, while an estimated future dividend yield of around 1.5% is not to be ignored. 

In all, and while risks remain, government drives towards energy transition, and renewable energy systems regularly using copper, should keep existing shareholders at least supportive. 

Positives: 

• Expanding operations
• Focus on costs

Negatives:

• Less diverse commodity portfolio than many rivals
• Currency movements can hinder performance

The average rating of stock market analysts:

Strong hold