Harmony’s interim profit up by 7 111%
Producers see bumper earnings ahead
SOUTH African gold producers see bumper profit ahead on the back of bullish gold prices, with Harmony Gold expecting to boost its interim net profit by a whopping 7 111 percent, while Gold Fields forecasts its annual earnings to be up to 200 percent higher.
The sudden escalation in the China-US trade war last year sent investors fleeing to the traditional safe havens, such as the yen, bonds and gold.
The gold producer said in a trading update and operational report yesterday that its net profit in the six months to December was likely be R1.3 billion or higher than for the corresponding period.
Headline earnings per share (Heps) and earnings per share (Eps) were both expected to be at 249 cents – 6 325 percent higher than the restated loss of 4c for the previous comparable period.
In US dollar terms, Heps and Eps were expected to be 17 US cents (R2.51) a share, compared to zero US cents per share for the previous comparable period.
It said it had lifted its revenue 12 percent to R1.7bn due to the higher gold price received. The rand gold price averaged R683 158 per kilogram, 19 percent higher compared to R572 898/kg in the corresponding period. This helped the group offset production falling 8 percent during the reporting period, which it attributed to a 6 percent reduction in underground recovered grade at Kusasalethu and Target gold mines.
Total gold produced for the six months was 8 percent lower at some 688 379 ounces, or 21 411/kg.
Harmony Gold also said it had restated its previous year’s interim earnings following a bona fide error in the calculation of its borrowing costs as they should have been stated in the
IAS 23 accounting standards.
The outcome of the correction was an increase in the comparative period’s amortisation and depreciation by R10 million as well as finance costs by R84m. This decreased net profit for the six months ended December 2018 to 4c from a profit of 15c a share previously. Harmony will publish its interim financial results on Tuesday, February 11.
Meanwhile, rival Gold Fields in a trading statement yesterday said that its Heps for the 12 months to December
were expected to range from $0.19 to $0.21 a share, 171 to 200 percent higher than the headline earnings of $0.07 a share in the prior period.
It said basic Eps would range from $0.19 to $0.21 a share, 145 to 150 percent higher than the basic loss of $0.42 a share in the prior year.
Normalised earnings per share were expected to range from $0.41 to $0.43 a share, 1 267 to 1 333 percent higher than $0.03 a share last year.
Gold Fields said the increase in basic and headline earnings was driven by higher production, higher gold prices achieved, lower cost of sales and lower impairment charges in 2019. It said attributable gold equivalent production for 2019 was expected to be 2 195koz (koz is a thousand ounces), 8 percent higher than the prior year, exceeding the upper end of the guidance range of 2 130 to 2180koz. Gold Fields said it expected to release it annual results on February 13.
Gold Fields’ share price rose 3.33 percent to close at R94.86 on the JSE yesterday.