Is OZ Minerals Limited still a buy on profit result?

Copper and gold producer OZ Minerals Limited (ASX: OZL) has reported a 3% increase in underlying profits for the six months ending June 30.

Here are the key takeaways from the ASX announcement:

  • Revenue up 8% to $398 million
  • Underlying earnings before interest and tax (EBIT) up 1.1% to $76 million
  • Underlying net profit after tax (NPAT) up 3% to $55 million
  • Underlying earnings per share up 1% to 18.1 cents per share (cps)
  • Dividend declared of 6 cps. OZ Minerals’ shares will trade ex-dividend on September 8 with payment on September 23
  • Cash at bank up 11% to $564 million with no debt
  • Copper of 58,368 tonnes and gold of 57,662 ounces was produced

What’s next:

Management noted that momentum continues to build across the company with the group’s Carrapateena asset on schedule to deliver first concentrate in the second half of 2019.

With a keen focus on creating a lean cost structure with reduced corporate overheads and reduced operating costs, management has stated that OZ Minerals is positioned as one of the lowest operating cost copper producers in the world.

With a market capitalisation of around $2 billion, OZ Minerals is one of the larger exposures to copper producers available to investors on the ASX, with exposure to gold as well.

For the full year, Oz Minerals expects to produce between 115,000 and 125,000 tonnes of contained copper, but financial results remain highly dependent on where the copper price goes – and that doesn’t appear to be positive. Goldman Sachs recently predicted a 17% fall in copper prices – despite the huge falls already experienced in the past year or so.

Given that, Oz Minerals doesn’t appear to be the bargain buy investors might think.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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