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OZ Minerals Lifts Revenue and Underlying Profit

OZ Minerals Lifts Revenue and Underlying Profit
The company’s cash balance totalled $564.3 million at the end of the half year with no debt.
Aug 10, 2016 By Simon Herrmann Tags: OZL, Earnings

Copper-gold miner OZ Minerals Ltd (ASX:OZL) posted a strong underlying result for the half year ended 30 June 2016. Underlying NPAT after tax improved to $55 million while Underlying EBITDA was $178.4 million with an EBITDA margin of 45 per cent.

OZ Minerals’ group revenue improved $8.2 million or 2.1 per cent to $398.3 million. Net profit after tax was $29.5 million, significantly below last year’s $51.8 million as a result of non-underlying items.  The difference between the underlying and the statutory result is the settlement of a class action by former Zinifex shareholders which amounted to total expenses of $36.4 million or $25.5 million after tax.

Operating cash flow for the half year was $116 million as a result of “sustained operational efficiencies, the successful cost control program and lower open pit mining expenditure which largely offset the impact of lower copper tonnage and pricing.” The company’s cash balance totalled $564.3 million at the end of the half year with no debt.

Management announced a half year dividend of six cents, unchanged from last year’s half-year distribution. The dividend payment totals $18.1 million and will be paid on 23 September 2016.

Outlook: OZ Minerals On Track to Achieve Production Guidance

2015 was a record year of production for OZ Minerals and the company expects 2016 to be “another strong year of production.” Copper production during the half year was 58,368 tonnes and gold production totalled 57,662 ounces of gold, both in line with guidance. The full year copper guidance has been reaffirmed at between 115,000 and 125,000 tonnes for the group. The revenue derived from copper mining was approximately three times greater than revenue related to gold and silver mining, however gold and silver revenue rose ~16 per cent year on year. 

Managing Director and CEO, Andrew Cole, commented on the progress of Prominent Hill and Carrapateena: “Momentum continues to build across OZ Minerals with the Prominent Hill team delivering another strong quarter. The Carrapateena team is progressing studies and decline construction remains on track to deliver first concentrate in the second half of 2019.” Mr Cole also stated that the Prominent Hill mine has the “lowest half operating costs relative to comparative underground operators.”

OZL’s share price was little changed following the release of the result and last traded at around $6.20 at 11:30am. The stock has outperformed the broader market and is up over 50 per cent year-to-date and nearly 70 per cent over the past 12 months.

Wise-owl released a research note for OZL earlier this year which is accessible for members only.

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Simon Herrmann Author: Simon Herrmann Aug 10, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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