Citi predicts rebound for European miners
Anglo American
2,160.00p
16:35 22/04/24
Citi named Anglo American, Rio Tinto and Polymetal International as its top metals and mining picks as the bank predicted earnings recovery and higher dividends for the sector.
Ferrexpo
48.20p
16:39 22/04/24
Fresnillo
587.00p
17:15 22/04/24
FTSE 100
8,023.87
17:09 22/04/24
FTSE 250
19,599.39
17:14 22/04/24
FTSE 350
4,408.19
17:14 22/04/24
FTSE All-Share
4,362.60
16:44 22/04/24
Glencore
474.90p
17:15 22/04/24
Industrial Metals & Mining
6,790.23
17:14 22/04/24
Mining
10,533.57
17:14 22/04/24
Norsk Hydro
kr3,267,265.00
19:00 21/12/20
Polymetal International
215.00p
16:35 31/07/23
Rio Tinto
5,386.00p
17:15 22/04/24
European miners' production results have beaten Citi analysts' expectations and copper equivalent production is in line with pre-Covid levels, they said.
Earnings in the sector should bounce back in the second half of 2020, analysts Ephrem Ravi and Krishnan Agarwal said. They forecast free cash flow more than doubling in the second half with higher spending offset by cash releases.
"Resilient operations, higher commodity prices [and] cost tailwinds from continued weakness in currencies are key drivers for earnings recovery in 2H20," the analysts said in a note to clients. "Inventory destocking should further cushion the cash flow."
As a result, total dividends for 2020 should increase by about 10% with payment likely in 2021, Ravi said. Norsk Hydro will resume its dividend and Glencore's cash flow should support payment of a dividend in 2021, he said.
Ravi said Anglo American, Rio Tinto and Polymetal were his top picks in the sector. He opened "catalyst watches" for Anglo American, Polymetal, Fresnillo and Ferrexpo.