CANBERRA: Australia’s largest gold miner Newcrest Mining has swung to profit in the 2015 financial year, rebounding after a massive writedown in the prior year, as the firm cut costs amid a $400 million efficiency drive.
Newcrest today posted a statutory net profit of $546m for the year to June 30 after a loss of $2.2 billion last year. The prior year’s result was weighed down by a $2.7bn writedown.
On an underlying basis, profit was 19 per cent higher, hitting $515m for the 12 months to June 30. The result beat expectations, with analyst forecasts centred on an adjusted net profit of around $484m.
Investors reacted positively to the news, lifting Newcrest shares 4.47 per cent to $11.44 by the end of trade. Revenue was also positive, lifting 8 per cent over the year to $4.34bn, in line with expectations of around $4.33bn.
The strong figures were aided by lower costs, with the firm’s all-in sustaining cost dropping 12 per cent over the year to $US789 per ounce.
A lower Australian dollar also helped buoy the miner’s bottom line, along with an increased contribution from its Cadia East project, after a ramp-up of production.
The miner recently smashed analyst forecasts for its June quarter gold production, but its full-year copper output came in at the lower end of its stated target.
Newcrest, which operates mines in four countries and employs around 10,000 workers, said it was the ninth straight quarter of either meeting or exceeding its production targets.
The price of gold recently slipped to a five-and-a-half year low under $US1,100 an ounce, while the price of copper has recently touched its lowest point for six years. But the miner’s efficiency improvement program has delivered around $390m of cash benefits to date, Newcrest said.
The firm also managed to cut down on its debts, reducing its net debt by 22 per cent to $3.76bn as of the end of June, aided by the exchange rate.
Newcrest said it was targeting 2.4 to 2.6 million ounces of gold output during the 2016 financial year, compared to the prior year’s 2.42m, and 80,000 to 90,000 tonnes of copper output, slightly below last year’s 96,800 tonne result.
Newcrest is also targeting a capital spend of between $700m and $825m this fiscal year. The miner said its strong financial performance was overshadowed by two fatalities during the year and a further death since the end of June.
“Newcrest’s board and management remain resolutely focussed on and committed to the safety of Newcrest’s workforce and will relentlessly seek to eliminate fatalities and life-altering injuries from our operations,” chief executive Sandeep Biswas said. Newcrest declined to pay a dividend. Newcrest shares ended the day 4.47 per cent higher at $11.44.
