Newcrest Mining Ltd., Australia’s largest gold producer, reported first-half profit 9.6 percent higher than analyst estimates, pushing the company’s stock to its biggest gain in almost five months.
Net income was A$320 million ($329 million) for the six months ended Dec. 31, the Melbourne-based company said today in a statement, compared with the median estimate of four analysts surveyed by Bloomberg of A$292 million. Earnings were 51 percent less than the A$659 million a year earlier, which were boosted by price gains and an asset sale.
“Production is expected to be higher in the second half of the 2013 financial year,” it said. Newcrest produced 953,331 ounces of gold in the six months to Dec. 31, 18 percent lower than a year earlier, the company said.
Newcrest shares climbed 5 percent to A$24.52 at the close in Sydney, their biggest advance since Sept. 14. Output for the full year, estimated at the low end of a range of 2.3 million to 2.5 million ounces, will be driven by expansions at Cadia East in New South Wales and Lihir in Papua New Guinea, Newcrest reiterated today.
Newcrest kept its interim dividend unchanged at 12 cents a share. Three analysts in the survey had predicted a payout of four to 15 cents a share. The company will consider a higher dividend in the future, while keeping a long-term goal to reduce gearing ratio to around 10 percent from 16.9 percent, Chief Executive Officer Greg Robinson said on a conference call after the earnings.
The dividend “indicates the board’s comfort with the cash generating outlook for the company,” Credit Suisse AG analysts Michael Slifirski and Sam Webb said today in a note to clients. “This is a vote of confidence in both Cadia East and Lihir that has perhaps not yet been recognised by the market.”
Gold producers are expanding mines and boosting output to cope with rising costs and benefit from prices that have increased for 12 consecutive years as Asian demand rose and central banks boosted purchases. Spot gold, up 4.9 percent in the six months to Dec. 31, was little changed at $1,672.30 an ounce as of 4:14 p.m. in Melbourne.
The lower first-half profit was “primarily due to the lower production and more reliance on higher cost ounces,” it said today.
Sales fell 23 percent to A$1.81 billion in the first half, while cash costs declined 6 percent to A$973 an ounce. Newcrest is implementing a close review to improve performance of its 50 percent-owned Hidden Valley operation in Papua New Guinea following a 17 percent drop in output in the period, it said.
“For the remainder of the 2013 financial year, Newcrest expects higher production in line with achieving the bottom end of guidance, and a subdued cost environment,” the company said.