UPDATE 2-Antofagasta doubles dividend as profits tick higher
* Dividend more than doubled from year ago to 98.5 cents per share
* Decision on Antucoya expected in one to two months
* CEO expects copper price at around $365/T this year
LONDON, March 12 (Reuters) - Copper miner Antofagasta sought to brush off investor worries about short-term growth with better than expected 2012 dividends on Tuesday, as profits ticked higher in spite of lower copper prices.
The group said on Tuesday that it would pay a dividend of 98.5 cents per share, more than double a year ago, implying a payout ratio of 70 percent of net earnings - above market forecasts. That includes a special dividend of 77.5 cents.
Analysts had speculated that Antofagasta's robust balance sheet and the suspension of its only major growth project late last year would mean a boost for 2012 dividends, reinvigorating shares that have underperformed since the end of January after the group gave lacklustre 2013 guidance.
The Chilean miner has paid special dividends for the past decade, even through the global financial crisis - though it reined in its payout last year and said it would spend more on a new generation of growth projects.
The payout boost lifted its stock, one of the worst performers among London-listed blue chips so far this year. The stock was up 4.7 percent at 1050 GMT, outperforming a flat sector index.
Analysts at Deutsche Bank said the decision to pay out cash was "sensible" after the company suspended its costly Antucoya project, one of the most capital intensive in the industry, and ended the year with a strong cash position.
"Anto has traded at a premium to both the diversified miners and the global copper peers for two reasons: better historical growth and superior capital management," analysts at Deutsche Bank said in a note.
"Although the suspension of the Antucoya project has dented the near-term volume growth outlook, this step reinforces the second reason for Anto's premium in our view."
Mining companies are under pressure to improve returns to investors, and Antofagasta's Chief Executive Diego Hernandez said he would not pursue tonnage at all costs.
"I think that we shouldn't be adding tonnage just because we want to produce more," Hernandez said. "I think that the industry needs to be careful about additional copper that we can put into the market in the medium term."
He cited softer demand and a small surplus in the second half of this year, as well as next year and in 2015.
Antofagasta suspended development at Antucoya, where spending estimates have neared $1.9 billion, blaming escalating costs at what was already one of the most capital intensive projects in the copper industry.
Hernandez said he expected a decision on the company's review of Antucoya in one to two months.
"If we decide to resume then we will go ahead with that. If we decide to stop then we'll stop for a couple of years," Hernandez said in an interview with Reuters, adding the mine could be integrated into a bigger production hub.
The company took a $350 million impairment hit on Antucoya following the freeze.
The miner's earnings before interest, tax, depreciation and amortisation (EBITDA) were $3.83 billion, up just under 5 percent and within analyst forecasts. Revenues rose almost 11 percent, despite an almost 10 percent drop in the copper price.
Antofagasta warned when it published 2012 production numbers earlier this year that it would not increase output this year, while costs would jump by over a third due to greater spending at two key mines, Esperanza and Los Pelambres.
Hernandez expects the price of copper this year to remain around consensus forecasts of $365 per tonne.
"We don't see that too different except for the end of the year where there is a question mark if China demand increases and takes care of this additional copper," he said. "If not then we will see some pressure on the price."
China is the world's largest consumer of copper, accounting for 40 percent of global demand.