Shares of Hudbay Minerals (TSX: HBM) experienced a decline of as much as 4.15% in premarket trading on Tuesday after the Canadian-based copper and gold miner reported second-quarter earnings that fell short of analysts’ expectations.
The financial picture for Hudbay in the second quarter was mixed. The company reported a net loss attributable to shareholders of $16.6 million, or five cents per share. This compares to a loss of $14.9 million, or five cents per share, in the same quarter last year. However, revenue increased significantly, rising over 35% to $425.5 million from $312.2 million a year earlier, but still was below the consensus estimate of $461.9 million.
On an adjusted basis, Hudbay posted a modest profit attributable to shareholders of $100,000, equating to zero cents per share, significantly underperforming compared to the $0.07 per share that analysts had anticipated. This is a marked improvement from the adjusted loss of $18.3 million, or seven cents per share, reported in the corresponding quarter of the previous year.
Moreover, the company has made substantial progress in reducing its debt burden, a critical element of its long-term financial strategy. Hudbay successfully decreased its net debt by $405.9 million in the first half of 2024, bringing its total net debt down to $631.8 million. This deleveraging effort is part of a broader initiative to strengthen the company’s balance sheet and enhance its capacity to invest in growth opportunities.
The company produced 28,578 tonnes of copper and 58,614 ounces of gold during the quarter. These figures represent a decrease from the 34,749 tonnes of copper and 90,392 ounces of gold produced in the first quarter. Hudbay attributed the production drop to lower planned grades in its operations in Peru and Manitoba, coupled with ongoing planned stripping programs at the Pampacancha and Copper Mountain mines.
Despite the quarterly setbacks, Hudbay’s President and CEO, Peter Kukielski, expressed confidence in the company’s strategic direction. “The continued execution of our operational plans in the second quarter has positioned us well to achieve our 2024 production guidance,” Kukielski stated.
He emphasized that the company’s exposure to gold by-products and strong cost control measures had allowed it to lower its 2024 cash cost guidance for copper to a range of $0.90 to $1.10 per pound, down from the earlier estimate of $1.05 to $1.25 per pound.
This improvement in cost guidance reflects Hudbay’s strategic advantage from its gold by-product credits, which have provided a cushion against the fluctuations in copper prices. The company’s focus on maintaining rigorous cost controls has been instrumental in enhancing its financial flexibility, especially as it undertakes significant stripping activities to unlock higher-grade ores that are expected to drive stronger production in the second half of the year.
Looking ahead, Hudbay reaffirmed its full-year 2024 production guidance for all metals, including an anticipated 137,000 to 176,000 tonnes of copper and 263,000 to 319,000 ounces of gold. The company expects to see stronger production in the second half of the year as it begins to access the higher-grade ores currently being prepared through its stripping programs.
Hudbay Minerals last traded at $7.12 on the TSX.
Information for this briefing was found via Investing.com, City News, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
