Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Gold Fields’ Profit Drops 7.4% After Strikes Cut Production

Feb. 14 (Bloomberg) -- Gold Fields Ltd., the company that spun off some South African mines this week after a spate of strikes in the country, reported fourth-quarter profit fell 7.4 percent because of lost production, missing analyst estimates.

Adjusted net income declined to 1.37 billion rand ($155 million), or 1.87 rand a share, from 1.48 billion rand, or 2.02 rand, in the prior quarter, the Johannesburg-based company said today in a statement. That compares with the 2.03 rand a share median of six analyst estimates compiled by Bloomberg. Output sank 7 percent to 754,000 ounces from the previous three months.

Gold Fields dropped 1.9 percent to 90.26 rand by the close of Johnannesburg trading, the biggest daily decline this month.

The company on Feb. 11 spun off its deeper, more labor-intensive mines into Sibanye Gold Ltd., partly on the strikes that began in the country’s platinum industry. Gold Fields’ three operating mines in South Africa returned to production in November after two months of wildcat stoppages involving as many as 23,540 of its 35,700 workers. The company kept its mechanized South Deep operation that is also its second-biggest mine.

“One thing that’s different for me is now I only have 3,500 employees to deal with,” Chief Executive Officer Nick Holland said in an interview, asked about labor relations. “At South Deep our employees, being skilled and semi-skilled, are earning already significantly more than the other operations.”

Foreign Operations

The KDC and Beatrix mines in South Africa lost 110,000 ounces of output following the strike, the company said, while production at foreign operations rose 11 percent to 496,000 ounces, led by Cerro Corona in Peru and Agnew in Australia.

“While the international operations had an outstanding quarter, KDC and Beatrix in South Africa were impacted by the industrywide illegal strikes,” Holland said in a statement.

Wage talks between workers and producers represented by the Chamber of Mines this year may improve the situation, he said.

“There’s a realization by all parties that continuing to push for above inflation increases and decline in productivity is a recipe for even greater declines in production than what we’ve seen in the past,” Holland said. “The government knows that, organized labor knows that and the workforce knows that.”

Strikes over pay that spread from platinum mines to gold, iron-ore and coal producers cut output by 10.1 billion rand in 2012, costing tax revenue, exports and jobs, according to the National Treasury. Unrest and above-inflation pay gains partly led to the decision by Gold Fields to spin off local assets.

The average price of gold climbed 3.9 percent in the fourth quarter to $1,718 an ounce from the previous three months. Gold analysts in South Africa compare quarters sequentially.

The company’s full-year profit fell to 6.83 billion rand from 7.24 billion rand. Gold Fields also operates in Ghana.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.