Slump hits Fresnillo
FRESNILLO, the world’s largest silver producer, yesterday said its profits in the first-half had slumped 10.8 per cent, as prices for the precious metal tumble in the downturn.
The Mexican company, which is listed in London, said pre-tax profits for the period were $179.9m (£110.3m) down from $201.6m the previous year.
But the miner said it was upbeat about the outlook for the rest of the year.
“We remain positive about the second half of 2009, reiterate our production targets for the full year and remain confident of achieving … our current profit margins,” chief executive Jaime Lomelin said.
Net income dropped to $121.1m, down from $141m a year earlier, while sales slid 11 per cent to $378.9m. Fresnillo said its interim dividend was 5.25 cents a share.
Full-year gold output will be about 264,000 ounces and the company will produce an additional 70,000 ounces in 2010, Lomelin said.
“We expect renewed cost inflation, driven by higher oil prices, in the second half to begin to erode margins, despite our expectation of higher silver prices,” Jonathan Guy at Investec said.
The price of silver, which is used in industrial electronics and as an investment vehicle and inflation hedge, is pegged to the state of the global economy.
Silver prices hit a two-month high of $15.16 an ounce on Friday, amid hopes economic recovery would boost industrial demand for the metal.