Newcrest Mining (ASX:NCM) released interim financial and operating results for the first half of FY16. The miner’s profit declined 55% when compared to the previous comparable period (pcp).
Newcrest announced half year statutory profit of US$81 million along with an underlying profit of $63 million, which is a 55% and 65% decline respectively, from the previous interim period. The underlying profit declined as the company was adversely affected by lower realised US dollar gold and copper prices and lower copper sales volumes.
Revenue declined US$235 million, to US$1.54 billion for the six months ended December 2015. The 6% drop in revenue was primarily attributed to a 10% reduction in the average realised gold price.
However, gold production increased 6% to 1.2 million ounces while the overall copper production lowered 23% to 38,918 tonnes. Silver production decreased 12% to 1.14 million ounces.
Newcrest reduced its Group All-In Sustaining Cost by 5% to US$770 per ounce. Subsequently, the company’s free cash flow increased 19% to US$254 million and net debt was reduced by 8% (when compared sequentially) to US$2.65 billion.
The operating costs were reduced by 13% to US$969 million as Newcrest benefited US$156 million as a result of strong USD against AUD.
However, the company faced higher site production costs related to increased mine and processing activity and maintenance at Lihir mining site.
Newcrest’s Managing Director and CEO, Sandeep Biswas commented on the results: “Newcrest has delivered a strong financial result in a lower gold and copper price environment. We continue to further strengthen the balance sheet by safely maximising cash flow from operations, maintaining strong capital discipline and repaying debt.”
The board decided against distributing any dividend for the period, while stating that the company will resume dividend payments at an appropriate time in the future.
As at 12:00 PM (AEDT), NCM traded at $16.3, little changed since the announcement today morning.
Author: Matthew Dibb
Feb 15, 2016
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.