Harmony Gold Q1 Earnings Fall Y/Y - Analyst Blog

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Harmony Gold Mining Co. Ltd. ( HMY ) recorded net earnings (excluding items) of 0.5 cents per share in first-quarter fiscal 2014 (ended Sep 30, 2013), compared with earnings of 15 cents per share recorded in the year-ago quarter.

On a reported basis, Harmony Gold logged a net profit from continuing operations of $1 million in the first quarter as against net profit from continuing operations of $51 million in the prior-year quarter. 

Revenues and Costs

Revenues decreased roughly 22% year over year to $403 million in the first quarter from $519 million registered in the year-ago quarter. However, revenues increased roughly 9% sequentially from $369 million as a result of a 15% increase in gold sales.

Gold production decreased 3.7% year over year to 309,773 ounces (oz). However, gold production increased 12% from 276,109 oz recorded in the prior quarter. The sequential increase was primarily due to improved recovered grades at the underground operations including Kusasalethu, Tshepong, Target 1, Phakisa, Hidden Valley and Unisel. Despite the temporary closure of the shaft earlier this year, Kusasalethu returned to normal production.

Gold ounces sold decreased 3.6% year over year to 300,703 oz. However, gold ounces sold increased 15% from 261,901 oz recorded in the prior quarter.

Cost of sales decreased 12% year over year to $375 million in the first quarter. Operating profit decreased 39% year over year to $104 million from $171 million recorded in the last-year quarter, but increased 46% from $71 million recorded in the prior quarter.  

Gold price received declined 19.3% year over year to $1,342 per oz and decreased 5% sequentially from $1,407 per oz.

Cash operating costs decreased 8.7% year over year to $1,013 per oz and declined 11.5% sequentially from $1144 per oz. All-in-sustaining costs also declined 19% sequentially to $1,264 per oz from $1,551 per ounce recorded in the prior quarter.

Financial Overview

Cash and cash equivalents decreased 17% to $228 million as of Sep 30, 2013, from $275 million as of Sep 30, 2012. Cash flow generated from operating activities was $24 million as of Sep 30, 2013, compared with $174 million as of Sep 30, 2012. 

Outlook

Harmony Gold expects continued growth in commodity demand despite the current gold price volatility. In the last two quarters, gold prices in Rand per kilogram have been static and similar trends are expected to continue in the short term. In order to remain profitable at the prevailing gold price environment, Harmony Gold has undertaken cost reduction initiatives along with the moves to improve productivity and increase gold production. The company's strategy has been consistent to optimize operational delivery, improve cash flow and boost shareholders' value.

Harmony Gold currently carries a Zacks Rank #4 (Sell).

Other companies in the gold mining industry worth considering are Pretium Resources Inc. ( PVG ), Franco-Nevada Corp. ( FNV ) and Golden Star Resources, Ltd. ( GSS ). While Pretium Resources and Franco-Nevada carry a Zacks Rank #1 (Strong Buy), Golden Star Resources holds a Zacks Rank #2 (Buy).



FRANCO NV CP (FNV): Free Stock Analysis Report

GOLDEN STAR RES (GSS): Free Stock Analysis Report

HARMONY GOLD (HMY): Free Stock Analysis Report

PRETIUM RES INC (PVG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: FNV , GSS , HMY , PVG

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