Pan American Silver shares wobble on profit drop
TORONTO (Reuters) - Shares of Pan American Silver Corp PAA.TO recovered to close little changed on Wednesday after dropping 3 percent on a profit miss, as investors turned their attention to the company's forecast output and a dividend increase.
Late on Tuesday, the company said second-quarter net earnings fell to $44 million, or 29 cents a share, from $113.5 million, or $1.04 a share, in the year-earlier period.
Adjusted to remove one-time items, earnings were $17.1 million, or 11 cents a share, in the quarter ended June 30. That was well below the average analyst expectation of 32 cents a share, according to Thompson Reuters I/B/E/S.
The miss drove shares down more than 3 percent shortly after market opened. The stock later curbed losses to close down 0.1 percent C$15.18.
"Even though that adjusted number relative to analyst expectations probably hit the market pretty hard, at the end of the day, it wasn't entirely bad news going forward for the company," said David West, an analyst with Salman Partners.
He noted that while the company missed expectations on silver sales in the quarter - it sold 0.7 million less ounces than it produced - the company will likely make up those sales in the third quarter.
"Overall, they are going to catch up on their sales," said West. "It will work itself through."
Pan American's revenue fell 13 percent to $200.6 million in the quarter as its realized silver price dropped 23 percent to $29.53 an ounce. Costs rose 29 percent to $11.85 an ounce.
The Vancouver-based miner said it is boosting its quarterly dividend by 33 percent to 5 cents a share and it maintained its 2012 silver production target of 24.25 to 25.5 million ounces. Continued...