Kazakhmys reveal profit slump

Mining company Kazakhmys is slightly higher this morning, despite announcing a 35% year-on-year decline in six-month earnings.

Kazakhmys revealed a first-half pre-tax profit of $438 million, which compares to $679 million for the same period last year. The drop in profit was attributed to falling commodity prices and rising costs.

The company's revenue increased from $1.51 billion to $1.57 billion for this six-month period, as production levels were 7% higher. The cost of extraction lags behind the price of the underlying commodity; this means that while metal prices are high, mining firms are willing to pay higher wages to capitalise on the high metal price, but when prices fall, costs still remain high.

Kazakhmys is trading at 302p, up 0.35% on the day, but it is underperforming against the sector as a whole which is up 1.5% on average. Overnight, the HSBC Chinese manufacturing purchasing managers index (PMI) rose to a four-month high, which provided the industry with a shot in the arm.

Kazakhmys has dropped over 62% since the start of the year, partially because of declining copper prices but also because of the 26% stake it owns in struggling miner Eurasian Natural Resources Corporation. If Chinese demand continues to increase we may well see some bargain hunting.

Kazakhmys chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.