By Fresnillo, the Mexican precious-metals miner, reported a significant decline in pretax profit for the first half of 2023 despite an increase in revenue. The company’s guidance for the full year remains unchanged.
Financial Performance
For the six months ended June 30, Fresnillo recorded a pretax profit of $47.9 million, compared to $155.2 million during the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) also decreased from $459.1 million to $351.0 million.
Factors Affecting Profitability
“Though we have made good operational progress, we are facing higher costs across the business driven by inflation as well as the material impact of the revaluation of the peso against the US dollar, which have resulted in an impact on profitability in the period,” explained Chief Executive Octavio Alvidrez.
Cost of Sales
Cost of sales rose by 19% to $1.06 billion during the period, primarily due to higher production costs and the consumption of inventories at Juanicipio and Noche Buena mines, net of the reassessment of Herradura’s gold inventories.
Revenue Increase
Despite the challenges, Fresnillo’s revenue increased to $1.34 billion from $1.26 billion. This growth was driven by larger volumes of gold and silver sold at higher prices. However, lower zinc prices partially offset this positive trend.
Interim Dividend
The board decided to declare an interim dividend of 1.4 cents per share, a decrease from the 3.4 cents per share distributed in the previous year.
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