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Fresnillo profit decline despite rising metal prices

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Andrew R. Michaud

• March 05, 2024

Fresnillo, the world's largest silver miner, saw a 54% drop in pretax profit to $114.0 million in 2023, attributing the decline to higher costs in administrative and exploration expenses. Earnings before interest, taxes, depreciation, and amortization also fell by 13% to $655.7 million.

Revenue growth and analyst expectations

Despite the profit hit, total revenue increased by 11% to $2.705 billion fueled by higher volumes of silver sold and increased gold and silver prices. This revenue growth surpassed analysts' expectations of $2.69 billion. Analysts had estimated a pretax profit of $158 million and an EBITDA of $702 million as per a FactSet poll.

Production and cost management strategies

Fresnillo reaffirmed its production target for 2024 and outlined a capital expenditure target of approximately $440 million for the same period. The company emphasized its commitment to closely monitoring costs by implementing various cost optimization initiatives throughout 2023 and continuing into 2024.

Dividend declaration

Despite the profit dip, Fresnillo maintained its final dividend at 4.2 cents per share according to its distribution policy. The full-year dividend payout amounted to 5.6 cents, down from 16.7 cents in the previous year.

With a focus on cost management and strategic initiatives, Fresnillo aims to navigate through challenges while leveraging the increase in gold and silver prices for sustained growth moving forward.