Revenue Forecast
Fresnillo, the world’s largest silver producer, is set to release its 2023 financial results this Tuesday. Analysts anticipate a total revenue increase to $2.69 billion, up from $2.43 billion in 2022. These projections are based on a consensus of nine analysts’ estimates.
EBITDA Forecast
The forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) stands at $702 million, a decrease from $751.1 million reported previously.
Profit Forecast
Anticipated full-year pretax profit is predicted to decline to $158 million, down from $248.6 million in the prior year.
Company Performance
Over the past year, shares of Fresnillo have experienced a 39% decrease. This drop is attributed to inflation in Mexico, operational issues, and weakness in silver prices during the latter part of the year.
What to Keep an Eye On
Stay tuned for Fresnillo’s upcoming financial report to gain insights into its performance in 2023.
Fresnillo Faces Exchange Rate Challenges
In the latest production update from late January, Fresnillo has highlighted a significant impact from the 12% drop in the average Mexican peso to U.S. dollar exchange rate in 2023. This variation has directly affected administrative costs and, combined with persistent inflation within the mining sector, has placed additional strain on Fresnillo’s profit margins.
Margins Under Pressure
Berenberg analysts noted in a recent research note that despite production stabilization in recent years, costs have escalated, leading to a decline in margins. Specifically, Ebitda margins have decreased from 45% in 2021 to 31% in 2022, with a projected further decrease to 28% in 2023. As the company prepares to unveil its results, stakeholders anticipate further insights and explanations from management regarding this financial trend.
Challenges in Production Profile
The production profile of Fresnillo has encountered hurdles in recent times, primarily due to diminishing ore grades at the Herradura and Saucito mines, alongside operational setbacks at the Juanicipio site. With the company’s mines nearing the end of their lifespan, there is a critical emphasis on enhancing operational efficiency and implementing cost-effective measures to boost profitability. Berenberg analysts stress the importance of monitoring operational performances, particularly at key sites like Saucito and Fresnillo.
Focus Areas for Investors
Investors are keen on receiving updates on the operational status of key mines while also seeking clarity on the progress at Juanicipio. Additionally, a detailed overview of grade/volume guidance will provide valuable insights for stakeholders. As Fresnillo navigates through these challenges, a strategic focus on operational excellence and prudent cost management will be essential for sustaining growth and profitability in the long term. Decrease in Dividend Payout for Investors
In 2023, investors can anticipate a notable decrease in dividend payout compared to the previous year. The FTSE 100-listed miner, which previously declared a final dividend of 13.3 cents totaling $98 million, resulting in a full-year payout of 16.7 cents per share, is expected to see a drop in dividends for the upcoming year.
Analysts’ Projections
According to analysts’ forecasts provided by Visible Alpha, the miner is predicted to offer a final dividend of 5.2 cents and a full-year dividend of 8.7 cents for 2023. This signifies a significant decline compared to the previous year’s dividends.
