Barrick Gold Q1’18 Earnings Preview: Higher Gold Prices To Provide Relief To Barrick’s Falling Output And Support Earnings


Barrick Gold (NYSE: ABX) will report its first quarter 2017 results on 23rd April and conduct a conference call with analysts the following day. The consensus of analysts estimates, is a mean adj-EPS estimate of $0.14 and a revenue estimate of $1.89 billion, at a similar level as that of Q1 2017. The company’s top line is expected to decline due to falling gold output, with higher gold prices expected to provide some respite to the top line.

Lower Production Volume Expected To Negatively Impact Revenues

The company in its fourth-quarter earnings release guided towards a lower production volume for full-year 2018 as a consequence of its falling reserves. Barrick’s total gold output in 2018 is expected to be 11% lower than its production volume in 2017 (assuming the mid-point of the company’s 2018 guidance). The first-quarter production results released by the company highlights this trend. Total gold output for the first quarter was ~20% lower compared to the same period last year, consequently, sales volume was ~18% lower year-on-year (Y-o-Y). Production was particularly low at Barrick Nevada and Veladero. Shipment from Acacia was also lower amid the continued dispute with the Tanzanian government. Lower output is also likely to result in a higher cost per ounce of gold produced.

Relevant Articles
  1. Up 50% Over The Last 12 Months, Is Hyatt Stock Still Attractive?
  2. Capital One Stock Gained 44% In The Last 6 Months, What’s Next?
  3. Up 8% Year To Date As 5G Gains Traction, What’s Next For Verizon Stock?
  4. Up 32% In The Last 12 Months, Where Is BNY Mellon Stock Headed?
  5. Rallying 30% YTD, What’s Spurring The Rally In Applied Materials’ Stock?
  6. Will UPS Stock Recover To Its Pre-Inflation Shock High of $230?

Rising Gold Prices To Provide Some Relief

The company’s top line is expected to receive some relief from higher gold prices, which have been prevalent since the beginning of 2018. Barrick reported the average realized market price for gold in the first quarter was $1,329 per ounce vis-à-vis $1,220 reported a year ago, displaying a ~9% growth rate. Gold has been gaining strength due to the ongoing trade tension between the U.S. and China and the geopolitical tensions in the middle east. Gold is considered a safe-haven asset for investment and generally gains strength with increasing global uncertainty. These developments have remained beneficial for Barrick and hence is likely to offset the negative impact of its falling output.

Thus, based on the above arguments, Barrick is expected to have a moderate quarter. However, Barrick might see a significant decline in earnings if gold doesn’t continue to hold strong through the next three quarters. Our expectation for Barrick’s results for full-year 2018 has been outlined in our interactive dashboard. In case you have a different outlook and do not agree with our estimates, you can make changes to our assumed figures and arrive at your own fair price estimate for the company. 

 

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.