WOOD Flash – KAZ Minerals: 1H18 results – in line with consensus on EBITDA, FCF zero, but better than we expected

KAZ Minerals reported its 1H18 financial results this morning (16 August). The results were broadly in line with the consensus (and our estimates) at the EBITDA level, although the net income was marginally weaker (the higher D&A was the major deviation from our forecast, so we see this as immaterial). FCF was zero (on our definition – KAZ excludes development capex) and net debt remained broadly unchanged qoq, so the FCF beat our negative USD 57m forecast due to lower-than-expected capex, despite a deferred USD 250m payment to the Aktogay contractor. KAZ also announced its first dividend for several years following the completion of its two large projects. The interim dividend of USD 0.06/share represents a 0.9% yield based on the closing price last night, which is small, but we do not believe investors own KAZ for its dividends. We do, however, believe that the introduction of a dividend should be seen as a small positive. Guidance on the production volumes of all metals was reiterated (including 270-300kt of copper) and the cost guidance was unchanged. We expect the results to be broadly neutral for the share price.