Kazakh uranium monopoly JSC National Atomic Co. Kazatomprom's first half net profit fell 68% to 104.0 billion Kazakh tenge as gains from business combinations in 2018 tailed off, according to a Aug. 27 earnings release.
One-time gains from business combinations plummeted 83% to 54.6 billion tenge from 313.5 billion tenge a year ago, as the company restructured in the wake of its London listing in 2018.
Revenue rose 22% year over year to 176.6 billion tenge due to higher spot uranium prices and the weakening of the tenge against the dollar, with its operating profit jumping 69% to 27.1 billion tenge. The company's average sales price rose 14% year over year to US$26.99 per pound, while C1 cash costs declined 19% to US$9.9/lb and all-in sustaining costs slid 18% to US$13.3/lb.
It maintained full-year production guidance of 22,750 to 22,800 tonnes of U3O8 including joint ventures but lowered total capital expenditure projections to between 80 billion and 90 billion tenge, from 85 billion to 95 billion tenge guided previously.
Wood & Co. Analyst Ildar Davletshin highlighted Kazatomprom's declining operating costs and lower capex guidance as quite encouraging as management's cost optimization efforts fed through.
"I think the market overall should see a pick up in purchases in [the second half] which should further support spot prices," Davletshin told S&P Global Market Intelligence. "The key change should come in the next couple of years as long-term contracts with high prices expire."
Adjusted attributable EBITDA grew 28% to 58.5 billion tenge.
Reversal of a liability also contributed 17.0 billion tenge to earnings in the first six months of 2019.
Kazatomprom said the one-off gains in 2018 were due to the inclusion of JV Inkai LLP, Karatau LLP and JV Akbastau JSC, while JV Khorasan-U LLP's inclusion accounted for the 2019 gain.
As of Aug. 26, US$1 was equivalent to 386.06 Kazakh tenge.
