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OZ Minerals Ltd – Sharp Fall In Profits Due To Rising Stockpiles

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

OZ Minerals Ltd (ASX: OZL) is a Copper-focused international company based in South Australia. OZ Minerals have a number of operations that include, Prominent Hill, Antas, Carrapateena, Pedra Branca, West Musgrave and CentroGold. OZ Minerals has a market capitalisation of A$2.89 billion.

OZ Minerals Ltd - Report FY19

What are the results from OZ Minerals FY19?

Today (Wednesday 28 August 2019) OZ Minerals released its HY19 results. The main points are as follows:

  • Net revenue for HY19 is A$419 million, down 111 per cent from HY18.
  • Underlying net profit after tax for HY19 is A$43.9 million, down 89 per cent from HY18.
  • Earnings per share for HY19 is A13.6 cents, down 29 per cent from HY18.
  • Oz minerals paid an interim dividend of 8 cents per share (fully franked).


What were the drivers of this result?

The main driver of this result was rising stockpiles of metal ore.

The second driver was the weak price of Copper. The Average price of Copper was 3 per cent lower than the corresponding period.


What is the outlook for OZ Minerals?

OZ Minerals management notes that FY19 guidance is as follows:

  • Copper production (tonnes) for FY19 is 103-000 – 115,500.
  • Gold production (tonnes) for FY19 is 122,200 – 135,600

Copper and Gold production for FY19 is slightly lower or flat compared with production from HY18. Additionally, costs are slightly higher for FY19 compared with the corresponding year.


What is the market reaction?

The initial market reaction to OZ Minerals HY19 is positive. OZ minerals share price is up around 4.5 per cent and is currently trading at around A$9.32 (12.10pm, 28 August). However, this increase may not solely be attributed to OZ Minerals HY19 result, but mainly due to an overnight rise in the price of Copper and Gold. OZ minerals has a P/E ratio in the mid-teens and an annual dividend yield of 2.5 per cent (fully franked).




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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