Newcrest boosts payout despite profit slip
Newcrest Mining has posted a lower-than-expected full-year profit after an earthquake at its biggest mine cut production earlier in the year, but the gold miner is promising higher payouts to shareholders in future.
Newcrest's net profit for the year to June 30 of $US308 million ($A390 million), is a seven per cent decline from last year.
Meanwhile, sales revenue rose six per cent to $US3.48 billion.
Underlying profit, which strips out the effect of significant items, rose 22 per cent to $US394 million but was still short of market expectations of around $US450 million.
Newcrest chief executive Sandeep Biswas said all operations contributed to free cash flow generation during the year, helping the company reduce net debt and boost dividends.
"Both, our work on improving our operations and improving our balance sheet seem to be bearing fruit," Mr Biswas said.
Newcrest in July outlined a 2.4 per cent drop in full-year gold production to 2.38 million ounces, after operations at Cadia - its biggest and lowest-cost mine - were hit by a magnitude 4.3 earthquake in central west NSW in early April.
Production has resumed in Cadia's panel cave 2, but repair work continues in panel cave 1, with production there expected to resume in the September quarter.
Newcrest expects to produce between 680,000 and 780,000 ounces of gold at Cadia for the 2018 financial year, up on the 620,000 delivered in FY17.
Overall gold production is forecast to improve slightly to between 2.4 and 2.7 million ounces, and copper output is predicted to be between 80,000 and 90,000 tonnes, weighed down by weakness in the first quarter of FY18.
"Gold production and free cash flow is expected to be higher in the second half of the financial year as Cadia East ore production ramps up and there are fewer planned shutdown events," Mr Biswas said.
The miner is simultaneously targeting an increase in mill throughput at Cadia to 30 million tonnes per annum by the end of FY18, from 25 MTpa capacity currently.
Newcrest declared a partially-franked final dividend of US7.5 cents a share, doubling full-year payout to US15 cents, and said going forward, it would pay between 10 to 30 per cent of free cash flow to shareholders.
The market wasn't entirely impressed with the FY17 payout only at the 15 per cent of free cash flow.
By 1330 AEST, Newcrest's shares were trading 1.1 per cent lower at $21.62.
RBC Capital markets analyst Paul Hissey said that while the gold miner's overall guidance was broadly in line with expectations, the dividend was lower than estimates, with net gearing now sitting at a comfortable 16.6 per cent level.
NEWCREST FULL-YEAR PROFIT SLIPS
* Net profit $US308m, down 7pct from $US332m
* Revenue up 6.0pct to $US3.48b
* Final dividend of US7.5 cents, partially-franked, vs previous final payout of US7.5 cps unfranked
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