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Mining rout hits FTSE as Antofagasta scraps dividend
Mining stocks tumble as Antofagasta cancels final dividend following 56% profits slide, weighing on FTSE 100.
Mining stocks have tumbled after copper producer Antofagasta (ANTO) cancelled its final dividend following a 58% slide in profits.
Shares in the miner tumbled 8.4% to 492.6p, while rival miners were also dragged to the bottom of the FTSE 100, which fell 39 points, or 0.6%, to 6,135.
Antofagasta said in its full-year results that it was not recommending a final dividend, with 2015's interim payment of 3.1 cents sufficient to meet its 35% payout target.
'We know that copper is a cyclical industry and as a result of the actions we have taken over the past year we will be positioned to benefit from the recovery when it comes,' said Diego Hernandez, chief executive of the Chilean miner.
Antofagasta joins a raft of miners which have cancelled or reduced their payouts amid the commodities crunch. Anglo American and Glencore have suspended their payouts while BHP Billiton and Rio Tinto have both scrapped their progressive dividend policies.
Antofagasta's scrapping of its final payout takes total dividend cuts across the FTSE 100 to £5.7 billion for 2015 and 2016, according to Russ Mould, investment director at AJ Bell Youinvest.
'This move by Antofagasta represents a stunning change from the glory years of 2010, 2011 and 2012 when it paid out three special dividends worth a total of 127p per share, an enormous number compared to today's 486p share price and one that shows how the mining industry's fortunes have changed as commodity prices have tumbled,' he said.
Insurer Legal & General (LGEN) was also among the fallers, down 5.3% at 230.8p amid fears over its weaker-than-expected solvency capital ratio, a measure of its financial strength.
Risers included Royal Bank of Scotland (RBS), up 1.6% at 234.8p after analysts at Goldman Sachs said the bank was a 'conviction buy' with 60% upside to the shares.
Sainsbury's (SBRY) also inched higher, up 0.5% at 282p, after the supermarket reported its first quarterly sales growth in over two years.
On the FTSE 250, oil stocks were among the heaviest fallers, hit by the slump in Brent crude. Tullow Oil (TLW) was down 6.2% at 202.7p, Wood Group (WG) dropped 5.1% at 618p and Ophir Energy (OPHR) slid 3.6% to 82.6p.
Ocado (OCDO) was the biggest riser on the index, up 4.4% at 273.2p after the online grocer reported a rise in sales growth.
Among 'small cap' stocks, the BlackRock World Mining (BRWM ) investment trust was hit by the slump in mining stocks, down 4.3% at 217p.
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- Antofagasta PLC (ANTO.L)
- Anglo American PLC (AAL.L)
- BHP Billiton PLC (BLT.L)
- Rio Tinto PLC (RIO.L)
- Glencore PLC (GLEN.L)
- Legal & General Group PLC (LGEN.L)
- Royal Dutch Shell PLC (RDSb.L)
- BP PLC (BP.L)
- Royal Bank of Scotland Group PLC (RBS.L)
- J Sainsbury PLC (SBRY.L)
- Tullow Oil PLC (TLW.L)
- John Wood Group PLC (WG.L)
- Ophir Energy PLC (OPHR.L)
- Ocado Group PLC (OCDO.L)
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by Gavin Lumsden on Jan 20, 2017 at 17:01