Tuesday preview: Antofagasta's falling profits in focus

Antofagasta's 2015 earnings are likely to have taken a hit from lower commodity prices, according to analysts’ estimates ahead of the full year result on Tuesday.

Mining

10,989.78

17:09 18/11/24

3.18%

338.64

Chief executive Diego Hernandez in January warned that the global economic slowdown and associated falling commodity prices have hurt production at the Chilean miner.

Copper production fell 11% year-on-year and cash costs before by-product credits dropped 1% to $1.81 per ounce in the fourth quarter.

"Whilst we have finished the year on a good note, 2015 has been undeniably difficult,” Hernandez said at the time.

Deutsche Bank said it expects a 53% plunge in earnings before interest, tax, depreciation and amortisation (EBITDA) to $1.03bn (£721m) and an 87% drop in earnings per share to 6.3 cents.

The analyst noted the negative provisional pricing impact announced in the fourth quarter production report and the higher effective tax rate Antofagasta has guided to for the year.

Antofagasta expects the 2015 effective tax rate to be in the range of approximately 60-65%, including deferred tax charges that resulted from the recognition of tax losses during 2015.

“Given the significantly lower commodity pricing environment in 2015 compared with 2014 and the consequent impact on the group's earnings, these non-deductible expenses represent a greater proportion of the group's profit before tax compared with 2014, and accordingly result in an increase in the effective tax rate,” Antofagasta said in its fourth quarter update.

UBS predicts full year EBITDA of $964m, down 57% on 2014, with copper price weakness and significant medium-term headwinds from grade decline resulting in higher unit costs and higher capital expenditure. “We expect Antofagasta to report negative earnings of $12m for FY15, and we believe special dividends are highly unlikely this time around.”

Tuesday 15 March

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Kalibrate Technologies

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Antofagasta, Charlemagne Capital Ltd., Crossrider , Evraz, Gem Diamonds Ltd. (DI), Hansteen Holdings, Hastings Group Holdings , Huntsworth, Inchcape, Legal & General Group, Legal & General Group, Mears Group, PJSC MNC Norilsk Nickel ADR, SDL, The Gym Group, Zotefoams

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Vitec Group

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