Oz Minerals [ASX:OZL] Flags Lower Profit on Weak Sales and Copper Price

Copper miner Oz Minerals [ASX:OZL] posted a lower net revenue of $1.9 billion for the half year — $175 million lower — blaming it on reduced sales and weaker copper prices.

Realised copper prices were 7% lower than the previous reporting period a year ago, even as the net gold price went higher, also by 7%.

Net profit after tax was $207 million, and EBITDA was $693 million.

Earnings were 62 cents a share, lower than the year before. Speaking of shares, the metals miner closed at $27.98 on Tuesday, remaining mostly flat Wednesday morning.

Over the year, the stock has moved up 12%:

www.TradingView.com

Oz Minerals pushes for momentum amid pricing challenge

For the six months period ending 31 December 2022, Oz Minerals said that its revenue had plummeted $175 million lower than it was a year before, by turning in $1.9 billion in the latest half year.

The news is quite a blow, especially as the group had already flagged a challenging first half for 2022, strained by bad weather, inflation pressure, and labour shortages.

While these challenges linger, the metals miner put most blame on less sales in the half, but also on a falling copper price, which had dropped by 7%.

That said, gold was another story, increasing in price but by the same degree, yet gold sales also suffered in the half.

Copper and gold sales were both lower during the year in comparison with the year prior by around 2,900 tonnes and 40,200 ounces, respectively.

Lower gold volumes were mainly the result of the depletion of high-grade gold ore stockpiles at Prominent Hill in the prior year, Oz said.

OZ posted NPAT of $207 million on the $1.9 billion net revenue, $323 million less than 2021, with EBITDA at $693 million.

The EBITDA margin was 36%, and operating cash flows totalled $648 million.

OZL’s Managing Director and CEO, Andrew Cole, said:

‘2022 saw the OZ Minerals team end the year on a strong note after a challenging first half impacted by adverse weather, COVID-19 absenteeism, supply chain disruption and inflationary pressure. Despite the impact to production and costs, and a weaker copper price, we delivered net profit of $207 million on revenue of $1.9 billion.

‘The second half demonstrated a much-improved production performance through programs implemented to address the disrupted first half, with progressively decreasing COVID absenteeism, a more continuous material flow and increased equipment availability leading to less constrained processing at Carrapateena, and Prominent Hill’s underground operations providing higher copper grades and elevating plant performance.’

It has been a challenging time for the company, and while the group still managed to turn a profit — albeit a lower one — earnings per share were still 98 cents lower than the year before, at 62 cents.

2023’s production and unit cost guidance remains unchanged. Previously, OZL stated the West Musgrave Living Hub construct model required $110 million capital funding, now an increase of $110 million to $1.81 billion in capital budget has been approved.

The West Musgrave 2023 capital guidance is now revised to $625–725 million to reflect timing of spends and the capital budget changes mentioned above.

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Regards,

Mahlia Stewart

For The Daily Reckoning