Antofagasta’s Profit Declines 39% After Copper Prices Tumble

Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, said first-half profit fell 39 percent after metal prices declined and costs rose.

Net income slumped to $395 million from $646.1 million a year earlier, the London-based mining company said today in a statement. Sales dropped 12 percent to $2.78 billion.

Copper producers have seen profit eroded by weakening metal prices and cost gains. Poland’s KGHM Polska Miedz SA this month posted a 56 percent drop in quarterly profit, while Australia’s OZ Minerals Ltd. and Kazakhmys Plc reported first-half losses.

“With new copper supply coming online during the remainder of this year and demand growth largely dependent on the economies of China and the United States, the pricing environment for copper is expected to remain challenging,” Antofagasta said in the statement.

The company sold its copper at $3.15 cents a pound, 16 percent lower than a year earlier, while cash costs climbed 15 cents a pound to $1.76. Earnings before interest, tax, depreciation and amortization fell 31 percent to $1.28 billion, missing the $1.34 billion average estimate of seven analysts compiled by Bloomberg.

“As a single geography, single commodity stock, Antofagasta does not usually throw up too many surprises and so there will be some disappointment in the results today,” Liberum Capital Ltd. said in a note to investors.

The company fell 3.3 percent to 884.5 pence by the close of London trading, the steepest decline since Aug. 15.

Antofagasta, which produced 346,100 metric tons of copper in the first half, reiterated its full-year output target of 700,000 tons. It increased the interim dividend by 4.7 percent to 8.9 cents a share.

(Updates with closing shares in seventh paragraph.)
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