Evolution & Newcrest share prices: first-half results unpacked
We examine the first-half results from two of Australia's most important gold miners, released to the market this week.
Evolution Mining share price at a glance
When Evolution Mining (ASX: EVN) released its H1 results to the market this week, the company reported solid growth across all of its key financial metrics.
Better still, in the last five trading sessions the stock has now risen ~10% and currently trades at $4.12 per share, on a market capitalisation of $6.99 billion.
First-half fundamentals unpacked
On the top-line, Evolution Mining saw its revenues come in 19% higher during the half – hitting $898.1 million. On the bottom-line the company reported earnings (EBITDA) of $441.1 million – representing an impressive 23% increase on a half-on-half basis.
Margins also came in stronger during the half, with the company's earnings (EBITDA) margin hitting 49%. In H1 FY18 they stood at 48%.
From a production perspective, Evolution recorded total gold production of 362,857 ounces during the half, against all-in sustaining costs (AISC) of $1,041 per ounce.
Commenting on these results – Evolution’s CEO – Jake Klein, said:
'These record half year financial results demonstrate the quality of Evolution's asset portfolio. The EBITDA margins and free cash flow generation of our business are sector leading.'
Mr Klein further added:
'Importantly, the attractive growth opportunities we are delivering at our key long life, high margin assets reflect the sustainability of this strong cash generation.'
Though the market has evidently been bullish on the stock in the last week, the day after these results were released, JP Morgan reiterated their 'Neutral' rating on Evolution and reduced their price target by 8%, to $3.60 per share.
An interim dividend of 7 cents was also reported, with the ex-dividend date set for 24 February.
Newcrest Mining share price: H1 results in focus
Newcrest Mining (ASX: NCM) also reported a robust set of H1 results to the market this week; though its share price has drifted ~3.5% lower over the last five sessions and currently trades at the $28.32 per share mark.
Even so, Newcrest recorded an 18% boost in underlying profits – which reached $280 million during the half.
Maybe most importantly, the miner recorded total gold production of 1.1 million ounces, against all-in sustaining costs (AISC) of $880 per ounce.
Speaking of these results, Newcrest's MD and CEO, Sandeep Biswas noted that:
'The first half of the financial year was one in which we invested for the future. We completed the acquisition of 70% Red Chris, a mine with a potential Tier One orebody in Canada; we increase our investment in Lundin Gold, the owner of Fruta del Nortre, a Tier One mine in Ecuador, and we delivered some excellent drill results at Havieron and Red Chris.’
These future potential positives however have had an immediate negative impact, with NCM's H1 free cash flow (FCF) coming in at a negative $729 million. Indeed, this was attributed to the just-mentioned Red Chris acquisition and investment activity around Lundin Gold.
Finally, the miner reported a consistent interim dividend of 7.5 cents – unchanged from prior period and fully-franked.
Credit Suisse remained ‘Neutral’ on the stock in the wake of these results and reiterated their price target of $31.80 per share. At current price levels that price target would imply some upside potential for prospective and current investors.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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