Barrick Gold ABX swung to a profit in the fourth quarter of 2016, helped by its cost-reduction actions. The company logged a profit of $425 million or 36 cents per share in the reported quarter. In the year-ago quarter, the company had incurred a loss of $2.6 billion or $2.25 per share.
Barring one-time items, adjusted earnings were 22 cents per share for the quarter, beating the Zacks Consensus Estimate of 21 cents. Adjusted earnings also rose from the year-ago quarter figure of 8 cents per share. The results were supported by higher gold prices
and lower cost of sales.
Revenues rose roughly 4% year over year to $2,319 million in the reported quarter, surpassing the Zacks Consensus Estimate of $2,204 million.
Cost of sales fell roughly 18% year over year in the quarter.
Barrick Gold Corporation Price, Consensus and EPS Surprise
Barrick Gold Corporation Price, Consensus and EPS Surprise | Barrick Gold Corporation Quote
Total gold production declined to 1.52 million ounces in the reported quarter from 1.62 million ounces a year ago. Average realized price of gold rose 10% year over year to $1,217 per ounce in the fourth quarter. All-in sustaining costs declined modestly to $732 per ounce in the reported quarter from $733 per ounce a year ago.
Copper production decreased to 101 million pounds in the quarter from 138 million pounds in the prior-year quarter. Average realized copper price was $2.62 per pound in the quarter, up from $2.16 per pound a year ago.
Cash and cash equivalents were $2,389 million at the end of 2016, down roughly 3% year over year.
Barrick reduced its total debt by $2.04 billion or 20% during 2016, surpassing its $2 billion debt reduction target for the year. The company now has less than $200 million in debt due before 2019, and roughly $5 billion of its outstanding debt of $7.9 billion will not mature until after 2032. The company plans to reduce its total debt by $2.9 billion to $5 billion by the end of 2018, half of which have been targeted in 2017.
The company's board approved a 50% increase in its quarterly dividend to 3 cents per share from the prior payout of 2 cents. The revised dividend is payable on Mar 15, 2017, to shareholders of record as of Feb 28, 2017.
For 2017, Barrick anticipates gold production to be in the range of 5.60-5.90 million ounces. Cost of sales applicable to gold has been forecast to be in the range of $780-$820 per ounce for the year. The company sees all-in sustaining cost of $720-$770 per ounce for 2017.
Barrick has outperformed the Zacks categorized Mining-Gold industry over a year, supported by its cost and debt reduction actions. The company's shares gained 63% over this period while the industry saw a gain of 33.4%.
Zacks Rank & Key Picks
Barrick currently carries a Zacks Rank #4 (Sell).
Better-ranked companies in the basic materials space include Methanex Corporation MEOH , Albemarle Corporation ALB and Pershing Gold Corporation PGLC .
Methanex has an expected long-term growth of 15% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Albemarle holds a Zacks Rank #2 (Buy) and has an expected long-term growth of 10%.
Pershing Gold holds a Zacks Rank #2 and has an expected earnings growth of 98% for the current year.
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