Goldcorp Shares Plunge on Surprise Loss After Asset Writedowns

  • Stock was worst performer on Bloomberg Americas Mining Index
  • Quarterly net loss widened to $4.3 billion, or $5.14 a share

Goldcorp Inc. shares tumbled after the world’s third most valuable gold producer reported a surprise quarterly loss on asset writedowns amid a decline in the price of the precious metal.

The shares dropped as much as 12 percent, the biggest intraday slide since July 20, and were down 9.5 percent at 9:41 a.m. in Toronto. It was the worst performer among members of the Bloomberg Americas Mining Index.

The company’s fourth-quarter net loss widened to $4.3 billion, or $5.14 a share, from $2.4 billion, or $2.94, a year earlier, Goldcorp said in a statement Thursday. The results included an impairment charge of $3.9 billion, net of tax. The writedown also reflects losses related to foreign-exchange translation, the company said. The loss excluding one-time items was 15 cents a share. Analysts predicted adjusted profit of 1 cent, 21 estimates tracked by Bloomberg show.

Goldcorp said that this year’s gold production will drop by as much as 19 percent as the company focuses on “profitable ounces,” amid declining gold prices, it said. The company made the forecast assuming an $1,100 per-ounce gold price, compared with $1,300 a year earlier, according to company statements. Goldcorp will produce 2.8 million to 3.1 million ounces per year in 2016, 2017 and 2018, it said.

Dividend Cut

Goldcorp also changed its dividend structure. The annual dividend will be cut to 8 cents a share, paid on a quarterly basis, the company said in a separate statement. The company previously paid 2 cents a share monthly.

“This lower, sustainable dividend level provides shareholders a competitive yield while allowing Goldcorp to continue to strengthen its industry-leading balance sheet and invest in its growth projects,” the company said in the earnings statement.

Like its peers, the Vancouver-based company has been working to strengthen its balance sheet in a difficult gold market. Bullion prices slid 10 percent last year, the third straight annual decline, and Goldcorp shares lost 26 percent.

But as David Garofalo takes over from long-time chief executive officer Chuck Jeannes, the markets are starting to turn, which may facilitate the new boss’s vision including hunting further afield for new assets, particularly in Africa.

Gold is the best performing major metal this year with a 16 percent rally. Goldcorp shares are up 47 percent in the past month.

(A previous version of this story corrected impairments)

(Goldcorp scheduled a conference call to discuss the results at 1 p.m. New York time Friday, accessible in the U.S. and Canada at 1-800-355-4959 and for other callers at 1-416-340-2216. The conference ID# is: 5644646)

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