What To Expect From Barrick Gold’s Second-Quarter Results

Barrick Gold (NYSE: ABX) will release its second-quarter results on July 25, 2018, and conduct a conference call with analysts the following day. The company is expected to post weak quarterly results with average consensus market estimates expecting the company to post an EPS (Non-GAAP) of $0.14 and a revenue of $1.88 billion, roughly 36% and 13% lower, respectively, compared to the same period last year. Lower gold and copper sales volume coupled with higher cost are expected to weigh negatively on the company’s overall performance in the second quarter.

The recent production report released by the company stated that the company’s gold and copper shipments for the quarter were significantly lower compared to the same period last year. Gold sales were reported at 1.037 million ounces, almost 26% lower year-on-year (y-o-y) and copper sales were reported at 83 million pounds, around 24% lower y-o-y. The decline in gold sales aligns with the company’s overall lower guidance for the year reflecting its declining reserves and continued instability in its African operations. However, the decline in the company’s copper sales was an unexpected revelation and primarily reflects the company’s operational challenges at its Lumwana mines. The company has consequently lowered its full-year copper production guidance by almost 10% (assuming mid-points) and expects its production level to be relatively superior in the second half of the year.

Gold prices have also displayed marginal strength in the second quarter, having risen only by around 4% compared to the same period last year. Although the global trade war has stirred geopolitical concerns and increased the demand for safe-haven assets, the impact on gold has been minimal due to a stronger dollar. Thus, the subsequent increase in gold prices would not be sufficient to offset the impact of the company’s significant lower gold shipments for the quarter.

Additionally, the company expects to incur higher costs for the quarter for both its gold and copper operations, due to scheduled maintenance at the company’s key mines and additionally due to operational challenges at Lumwana. Thus, these disadvantageous factors are expected to result in the company’s performance in the second quarter to remain relatively weak. Our expectation for Barrick’s results for full-year 2018 has been outlined in our interactive dashboard. In case you have a different outlook, you can make changes to our assumed figures and arrive at your own fair price estimate for the company.

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