Goldcorp Profit Tops Estimates as Costs Beat Expectations

Goldcorp Inc., the second-biggest gold miner by market value, reported fourth-quarter earnings that beat analysts’ estimates after mining costs rose less than expected.

Net income increased to $504 million, or 47 cents a share, from $405 million, or 39 cents, a year earlier, the Vancouver- based company said yesterday in a statement. Profit excluding one-time items was 57 cents a share, topping the 55-cent average of 21 estimates compiled by Bloomberg. Sales declined 5.3 percent to $1.44 billion, missing the $1.56 billion average of eight estimates.

Goldcorp, led by Chief Executive Officer Chuck Jeannes, is among gold producers facing rising prices for labor, raw materials and equipment. The company’s average cost to produce and sell gold was $621 per ounce, compared with $529 in the fourth quarter of 2011. The average of four analysts’ estimates compiled by Bloomberg was for $654 an ounce.

“We view the 4Q release as largely a non-event to slight positive given the good cost performance,” Brian Yu, a San Francisco-based analyst at Citigroup Inc., said in a note yesterday.

Goldcorp produced 700,400 ounces of gold in the fourth quarter, compared with 687,900 a year earlier. The company struggled last year with seismic activity that affected output at the Red Lake mine in Ontario, its top producer, and water shortages at the Peñasquito operation in Mexico.

‘Strong Finish’

“Excellent quarterly performances at our two largest mines resulted in a strong finish to 2012 and position Goldcorp for a much improved 2013,” Jeannes said in the statement yesterday. “Red Lake in Canada benefited from full access to higher grade gold zones while Peñasquito in Mexico performed well despite commencing mining in a new, lower-grade phase of the pit during the quarter.”

The company, which is building three new mines, in Canada and Argentina, lowered its forecast for 2013 production to a range of 2.55 million to 2.8 million ounces on Jan. 7, from 3.2 million in January 2012.

Gold, which has risen for 12 straight years, averaged $1,719.36 on the Comex in New York in the fourth quarter, 1.9 percent more than a year earlier and 3.8 percent higher than in the previous three months.

The metal slumped below $1,600 an ounce today for the first time since August as signals on the U.S. economy spurred optimism, eroding demand for the precious metal as a store of value.

Goldcorp declined 2 percent to C$33.99 at the close in Toronto. Barrick Gold Corp., the world’s biggest gold producer, dropped 1.9 percent to C$31.82.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net