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Harmony Gold share price muted after well guided FY23 results

Harmony Gold Mining Company Limited has posted its full-year results, showcasing a solid performance amidst fluctuating gold prices and challenging operational conditions

Source: Bloomberg

Key Takeaways:

  1. Solid Performance: Despite fluctuating gold prices and challenging operational conditions, Harmony Gold Mining Company Limited has showcased a strong performance over the last financial year.

  2. Maintained Gold Production: Harmony Gold has managed to maintain its gold production levels, with only a marginal 1% decrease year-on-year.

  3. Improved Quality of Gold: Despite the slight decrease in production, Harmony Gold saw an impressive 8% increase in its underground grade, indicating a higher quality of gold being mined.

  4. This improvement in quality, coupled with a surge in the gold price received per kg, has significantly contributed to the company's profitability.

  5. Cost Efficiency: Harmony Gold has demonstrated cost efficiency by reducing its cash operating costs per kg by 5% year-on-year

  6. Financial Milestones: Harmony Gold has achieved significant financial milestones, including a dramatic turnaround in its basic earnings per share, marking a more than 100% increase.

Harmony Gold FY 2023 results

Harmony Gold Mining Company Limited has posted its full-year results, showcasing a solid performance amidst fluctuating gold prices and challenging operational conditions. While Harmony’s results highlight a strong performance over the last financial year, they were well guided through the groups recently released trading statement. The company has also already produced a 42% total return (dividends and capital gains) for the year to date, and the share price at current levels might be at a premium to an assumed longer term fair value.

The South African-based gold mining company has managed to maintain its gold production levels, with only a marginal 1% decrease year-on-year. In the year ended 30 June 2023, the company produced 45,651 kg of gold, compared to 46,236 kg the previous year.

Despite a slight downtick in production, Harmony Gold saw an impressive 8% increase in its underground grade, indicating a higher quality of gold being mined. This improvement in quality, coupled with a 15% surge in the gold price received per kg, has significantly contributed to the company's profitability.

The company's cash operating costs per kg fell by 5% year-on-year, leading to a 10% decrease in operating costs per ounce. This cost-efficiency is a testament to Harmony Gold's operational improvements in a volatile market.

The company's total costs and capital also fell by 8% per kg, resulting in a 7% decrease per ounce. These cost reductions have helped Harmony Gold to mitigate the impact of lower gold production and have contributed to a 46% surge in production profit, amounting to R 13.977 billion.

Harmony Gold's financial results reflect its strong operational performance. The company reported a dramatic turnaround in its basic earnings per share, from a loss of 172 South African cents in the year ended 30 June 2022, to a gain of 780 cents in the year ended 30 June 2023. This represents an increase of over 100%, marking a significant milestone in the company's financial performance.

Headline earnings also saw a significant boost, with a 62% increase in R million and a 39% increase in US$ million. This has led to a 60% increase in headline earnings per share in SA cents and a 36% increase in US cents.

Harmony Gold's full-year results demonstrate the company's resilience and adaptability in a challenging market environment. The company's impressive operational and financial performance is a testament to its strategic focus on cost-efficiency and quality improvement.

Harmony Gold: Analyst / broker ratings

Source: Refinitiv
Source: Refinitiv

A poll of analyst / broker ratings by Refinitiv suggests Harmony Gold to be a long term ‘hold’ as of the 30th of August 2023. A mean of these analysts price target estimates suggest a long term fair value share price of R78.88.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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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