Newcrest posts flat profit, as output fall offsets gold price

Newcrest has posted flat first half earnings despite a rising gold price, as production falls 12pc.

Newcrest CEO Sandeep Biswas. Picture: Stuart McEvoy

Newcrest Mining has posted flat earnings for the first half of the financial year, despite 2019’s rising gold price, and on the back of a 12 per cent fall in gold production.

Newcrest posted an after-tax profit of $US236m for the December half, down $US1m from the same time the previous financial year, with earnings before interest, tax, depreciation and amortisation also relatively flat at $US756m, and the interim dividend unchanged at US7.5c.

Managing director Sandeep Biswas said the period was one in which Newcrest “invested for the future”, after closing its $US774m acquisition of 70 per cent of the Red Chris mine in Canada, ticked off on a major expansion at Cadia and pumped millions into the ground at key exploration projects in Western Australia and Canada.

“Underlying profit of $US280m was $US43m higher than the prior period driven by a higher realised gold price, the favourable impact on operating costs for the Australian operations from the weakening of the Australian dollar against the US dollar,” Newcrest said.

Those gains were offset by lower production at all of Newcrest’s key sites, falling copper prices and higher tax payments.

Excluding Newcrest’s acquisition of Red Chris, and the $US61m it spent on increasing its stake in Lundin Gold, the company generated $US106m in free cash flow for the period, it said.

The result is in line with the expectations of analysts, who had expected Newcrest to post relatively flat earnings, despite higher gold prices, due to lower grades at its flagship Cadia mine in NSW.

Newcrest shares last traded at $29.55.