Nyrstar Targets Fivefold Earnings Jump on Mining Expansion
Nyrstar (NYR) NV, the world’s largest producer of refined zinc, said it plans to increase earnings fivefold in five years as purchases of more mines and improved output at existing ones reduce its production costs per ton.
Nyrstar plans to boost earnings before interest, tax, depreciation, amortization and special items to 1.5 billion euros ($2.1 billion) in 2016, according to a presentation published on its website. The company prepared the comments for a two-day analyst visit at the Tennessee Mines.
While Nyrstar aims for stable smelting costs per ton of refined zinc in the next five years, it expects that the relative production cost of its mines will decrease on higher output and additional acquisitions, which would make Nyrstar’s earnings less dependent on the price of the metal used to galvanize steel. The zinc producer said it screens acquisition targets for cash generation and the potential to reduce operating costs and may temporarily “stretch” a target to keep net debt below 35 percent of net debt plus equity.
“A very ambitious target,” Wouter Vanderhaeghen, at analyst at KBC Securities NV in Brussels, wrote in a note to investors today. “Note that the new target is a financial one and not linked to the degree of integration. Focus will be on profitability above volumes.”
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