Newcrest Mining Limited (ASX: NCM) has announced a healthy profit increase in its FY20 full-year report despite a decline in gold production. Here are the key details.
Key points of the FY20 report
Newcrest reported a 5% increase in revenue over FY19, recording $3,922 million in revenue despite a drop in gold production from 2.48 million to 2.2 million ounces. Copper production increased by 30% to 137,623 tonnes. Thanks to improved margins, EBITDA increased by 10% and EBIT jumped 29% to $1,191 million.
All-in sustaining cost (AISC) increased by 17% to $862 per ounce, but the all-in sustaining margin grew 26% to $668 per ounce, largely due to a 21% increase in the realised gold price for FY20. Cash flow from operating activities was stable, recording a 1% decline to $1,471 million.
Newcrest reported a 34% increase in underlying profit to $750 million, while statutory profit increased by 15% to $647 million.
Looking at the balance sheet, net debt increased by 58% to $624 million while gearing increased by 39% to 6.8%. The increase in debt is a reflection of what Chief Executive Officer Sandeep Biswas called “a year in which we invested in the future”. Newcrest spent $1.3 billion in its acquisition of Red Chris and increased exposure to the Fruta del Norte mine, and invested a further $400 million in organic growth opportunities and exploration.
This is also reflected in the free cash flow figure, which fell from $804 million in FY19 to -$621 million in FY20. Free cash flow before merger and acquisition (M&A) activity was $670 million.
Newcrest’s dividend
Newcrest has announced a final fully franked dividend of US17.5 cents per share, up around 20% from the FY19 final dividend of US14.5 cents per share. This brings the total dividends for FY20 to US25 cents per share.
Guidance and outlook
Newcrest has provided production guidance assuming no COVID-19-related interruptions. The FY21 forecast is for gold production of 1.95 to 2.15 million ounces and copper production of 135,000 to 155,000 tonnes. This would represent a decrease in gold production compared to FY20 but an increase in copper production.
AISC is expected to fall in the range of $1,800 million to $1,950 million, with FY20 results sitting neatly in the centre of these figures. Exploration expenditure is expected to increase to between $115 and $125 million.
To stay up to date on the latest reports and announcements, check out Rask Media’s ASX reporting season calendar.
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