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.

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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.

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