ENRC scraps divi after recording a loss in 2012

Eurasian Natural Resources Corporation, or ENRC, labelled 2012 as a 'challenging year' as a swing into the red led to the miner scrapping its final dividend.

Eurasian Natural Resources Corporation, or ENRC, labelled 2012 as a 'challenging year' as a swing into the red led to the miner scrapping its final dividend.

The resources giant recorded a loss before tax of $550m, down from a profit of $2.76bn the year before, as it took impairment charges and an onerous contract provision totalling $1.54bn.

Some $608m of the impairments were due to a write-down in the value of its aluminium assets which reflected the "deteriorating conditions of the aluminium market and increasing inflationary pressure on key cost items", the company said.

Meanwhile, the cost of sales was up 6.0% at $3.72m due to higher depreciation.

This resulted in a basic loss per share of 62 cents, compared with earnings per share (EPS) of 153 cents in 2011. Adjusted EPS fell from 155 cents to 41 cents.

Revenue declined by 18% over the year from $7.71bn to $6.32bn as a result of a "poor pricing environment". Some $1.24bn of this reduction was blamed on lower commodity prices in 2012, while lower sales volumes of ferroalloys and alumina also had an effect.

The company did not propose a final dividend, compared to the 18 cents-a-share dividend the year before. Its payout ratio fell to 16% (from 18% in 2011) based on the interim dividend of 6.5 cents paid at the half-year stage.

Chief Executive Officer Felix Vulis said: "2012 was a challenging year for the group, with deteriorating prices having materially impacted our earnings. However, management's performance partially countered these declines by containing inflationary pressures and maximising output from our key divisions in Kazakhstan."

Debt soars; balance sheet a priorityNet debt soared to $5.14bn at the end of the period, up from just $0.97bn in 2011 and ahead of Credit Suisse's $5.0bn estimate

ENRC secured an additional $3.0bn of bank facilities in 2012 and issued a three-year $500m bond to fund capital expenditure and acquisition. It refinanced its revolving credit facility in February, increasing it to $500m and extending the maturity to 2015 and is said to be at an "advanced stage of negotiation" over a new $700m debt facility.

"The management of our balance sheet remains a priority and we have a firm plan in place to fund our immediate development plans, increase production volumes and reduce debt to a more sustainable level in the medium-term," Vulis said.

Recommended

Which assets will benefit as the “jam tomorrow” bubble pops?
Investment strategy

Which assets will benefit as the “jam tomorrow” bubble pops?

With tech stocks, cryptocurrencies and many other “long duration” investments crashing hard, the “jam tomorrow” bubble looks to be bursting. John Step…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022
Seven cheap defence stocks to buy now
Share tips

Seven cheap defence stocks to buy now

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy de…
21 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022