WOOD Flash – KAZ Minerals: 2H19 financial results – strong beat on EBITDA, guidance in line with expectations
KAZ Minerals reported its 2H19 financial results this morning (20 February). The 2H19 EBITDA beat the consensus by 18%, due to higher-than-expected sales and lower-than-expected cash costs. Net debt rose 8% hoh, to USD 2.76bn, close to the consensus, but 3% below our forecast. The negative USD 178m FCF in 2H19 (on our definition) was 32% less negative than we expected, due the stronger EBITDA, and the capex being USD 140m below our assumption and KAZ’s guidance. KAZ announced a final dividend of USc 8/share (above our USc 6/share forecast), a 1.2% yield. The 2020E production guidance of 280-300kt of copper, 180-200koz of gold, 3moz of silver and 40kt of zinc assumes some decline yoy, after the strong 2019, but the numbers are close to our existing forecasts. The cash cost guidance, which implies a group average of USc 153/lb at the mid-point, is marginally higher than our US¢ 149/lb forecast, but we note that KAZ is typically conservative in its guidance, as we saw in 2019. Its capex guidance is marginally below our last 2020E forecast, by USD 15m, at USD 815m, including USD 150m on Baimskaya. Overall, we see the results as positive for the share price.Kaz Minerals is a holding company. Co. and its subsidiaries operates in the natural resources industry through five divisions: Bozshakol, Aktogay and East Region, which are engaged in the mining and processing of copper and other metals in Kazakhstan; Bozymchak, which is engaged in the mining and processing of copper and gold in Kyrgyzstan; as well as Mining Projects, which is engaged in the development of metal deposits and processing facilities in Kazakhstan. Co. operates the Bozshakol and Aktogay open pit copper mines in Pavlodar and the East Region of Kazakhstan, three underground mines in the East Region of Kazakhstan and the Bozymchak copper-gold mine in Kyrgyzstan.
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