Goldcorp Earnings Trail Estimates as Costs Rise, Gold Falls

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Goldcorp Inc., the world’s biggest gold producer by market value, reported first-quarter earnings that missed analysts’ estimates after costs increased and gold prices fell.

The net loss was $87 million, or 11 cents a share, compared with net income of $98 million, or 12 cents, a year earlier, the Vancouver-based company said Thursday in a statement. Earnings excluding one-time items were 1 cent a share, trailing the 9-cent average of 16 estimates.

Like many of its peers, Goldcorp is working to lower costs and focus on the most profitable operations following two consecutive annual declines in the price of gold. The company, which operates in North and South America, is also ramping up production at new mines in Argentina and Canada. As a result, first-quarter sales increased 16 percent to $1.02 billion, topping the $962.9 million average estimate.

“The EPS miss is focused around higher cash costs and higher” depreciation and depletion expenses, Greg Barnes, a Toronto-based analyst at TD Securities Inc., said Thursday in a note to clients.

Goldcorp’s all-in sustaining costs, a measure to compare miners’ performance, were $885 an ounce in the first quarter, compared with $840 a year earlier. Costs to account for depreciation and depletion of resources jumped to $322 million in the quarter from $169 million a year earlier.

‘Fairly Ambitious’

Higher-than-expected depreciation, depletion and amortization expenses may stem from the start of production at the Cerro Negro mine in Argentina and increased resource depletion at its Marlin operation in Guatemala, Goldman Sachs Group Inc. analysts led by New York-based Andrew Quail said Thursday in a note to clients.

Goldcorp fell 6.2 percent to C$22.71 at the close in Toronto. That pared the shares’ gain so far this year to 5.8 percent.

The company maintained its plan to spend $1.2 billion to $1.4 billion on capital projects this year, according to the statement.

“What’s bothering some people about Goldcorp is they’ve got fairly ambitious roll-out capex plans during a time when the gold price is down,” John Ing, Toronto-based chief executive officer at brokerage Maison Placements Canada Inc., said today by phone. “For the last two quarters, this has plagued Goldcorp.”

Gold futures averaged $1,217.46 an ounce in the first quarter on the Comex in New York, 5.9 percent less than a year earlier.

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