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REPORTING SEASON: Newcrest Mining Limited (NCM)

Brought to you by CommSec

 

Figure 1: Newcrest Mining Limited Ltd 12 month chart

 

Newcrest Mining (NCM) weighed by write-downs

·         Newcrest Mining (NCM), Australia’s largest gold miner posted a worse than expected FY14 loss of A$2.2bn. Its bottom line was held back most by greater than expected impairment charges

·         Underperformance at its Lihir operation in Papua New Guinea (PNG) was the main drag, accounting for 84% of impairments, write-downs & restructure costs. A 33.8% gearing level (a measure of debt) was worse than the market’s forecasts

·         Improved efficiencies and a 14% surge in gold production over the year helped lift revenue by 7% despite a 9% slump in the ‘realised gold price’ which fell to A$1,408/ounce. All-in Sustaining Costs (AISC) improved from A$1,283 to A$976/oz thanks to a rise in sales volumes, production efficiencies and cuts to Capital expenditure (CAPEX)

·         NCM recorded a 10% rise in copper sales and a 2% fall in silver revenue. Both metals only accounted for 16.8% of total sales. As anticipated no dividend was declared.

·         Looking ahead, NCM will continue focusing on profit growth, cash generation and productivity over the coming year. It expects gold production to be in the range of 2.2-2.4Moz. It expects CAPEX to fall to between $660-$740m and plans on spending no more than A$70m on exploration

·         NCM’s shares fell following the result; however are still up 42 per cent this calendar year. Despite the gains in recent months, NCM is down 74 per cent from the highs reached in November 2010. A 30% fall in the gold price since 2012 has also squeezed its margins

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,