Buenaventura Profit Misses Estimates on Output, Price Drop

Cia. de Minas Buenaventura SA, Peru’s biggest precious-metals producer, said first-quarter profit dropped for a fifth quarter on falling metals prices and output, missing analysts’ estimates.

Net income plunged 51 percent to $102.7 million, or 40 cents a share, from $208.1 million, or 82 cents, a year earlier, Lima-based Buenaventura said today in an e-mailed statement. Analysts expected profit of 65 cents a share excluding one-time items, the average of five estimates compiled by Bloomberg.

Mines operated by Newmont Mining Corp. (NEM) and Freeport-McMoRan Copper & Gold Inc. (FCX), in which Buenaventura holds 44 percent and 18 percent stakes, respectively, contributed less to Buenaventura’s earnings on lower gold, silver and copper prices and declining output, said Inteligo SAB analyst Lali Merino, who doesn’t own Buenaventura shares and rates the stock a buy.

“Earnings were hit by lower contributions from their equity stakes as result of major output declines and lower metals prices,” Merino said in a telephone interview from Lima before the report was released. “Costs also rose as the company is spending more on exploration.”

New York-traded gold and silver futures declined 5 percent and 7 percent, respectively, while copper fell 6 percent in the period.

Income from Buenaventura’s stake in Newmont’s Yanacocha gold mine fell 42 percent to $51 million. Freeport’s Cerro Verde copper mine, in which Buenaventura holds an 18 percent stake, contributed $27.2 million, down 40 percent from a year earlier.

Falling Production

Revenue declined 6 percent to $354.7 million. Gold production fell 12 percent to 243,811 ounces, while zinc and lead rose 24 percent and 44 percent, respectively, Buenaventura said. Silver output gained 12 percent to 4.72 million ounces.

Exploration spending rose 12 percent to $21.8 million.

Gold futures for June delivery rose 7.3 cents, or 0.5 percent, to $1,474.70 an ounce today on the Comex in New York. Silver gained 1.3 percent to $24.44 an ounce.

The report was released after the close of regular trading today. Buenaventura’s American depositary receipts, each representing one ordinary share, rose 34 cents, or 1.6 percent, to close at $21.22 in New York. The ADRs have dropped 41 percent this year.

(Buenaventura is scheduled to have its quarterly conference call April 30 at 11 a.m. New York time. To call from outside the U.S.: 1-334-323-7226, Code: 57454634. For U.S. participants: 57454634.)

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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