5th Mar 2024 17:01
(Alliance News) - Shares in Fresnillo PLC got a boost from a rising gold price on Tuesday, but the miner's annual results lacked spark.
That was the assessment of German bank Berenberg, which believes the gold miner's results and presentation fell short of convincing.
In 2023, Fresnillo's pretax profit more than halved, ending up at USD114.0 million from USD248.6 million in 2022.
Fresnillo blamed this decline on lower gross profits, as well as increased administrative and exploration expenses in 2023, resulting in a cut to the annual dividend despite a bump in revenue.
Exploration expenses rose to USD182.4 million from USD165.8 million, in line with the group's strategy to "intensify exploration activities in specific target areas".
Earnings before interest, tax, depreciation and amortisation fell 13% to USD655.7 million from USD751.1 million, while earnings per share dropped to USD0.31 from USD0.35 a year prior.
Total revenue, however, was up 11% to USD2.71 billion from USD2.43 billion.
Fresnillo cut its final dividend by 68% to 4.20 US cents, from 13.3 a year earlier. It brought its annual dividend to 5.6 cents, down two-thirds from a 16.7 cents total in 2022.
Analysts at Berenberg commented: "We came away from the results presentation with a broadly negative view: management talked about controlling costs, but limited hard guidance was provided.
"We struggle to take a particularly optimistic view on Fresnillo at current levels and think that the stock will continue to lag peers in terms of cash generation given a structurally higher cost base versus peers."
Nonetheless, Fresnillo shares got a boost on Tuesday, rising 3.7% to 493.70 pence each on the back of a rising gold price.
Gold was quoted at USD2,125.97 an ounce late Tuesday, higher against USD2,116.16 on Monday, as optimism around US interest rate cut builds. The precious metal had hit a record high of USD2,141.81.
By Eric Cunha, Alliance News news editor
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