Barrick Gold Reports Earnings Miss Due To Declining Sales, Expects Better Performance In H2 2018

Barrick Gold (NYSE: ABX) reported its second-quarter results on July 25th and conducted a conference call with analysts the following day. The company’s results displayed weak performance wherein its earnings fell below analysts expectations primarily due to higher maintenance and fuel costs and lower shipment volumes. The company reported an EPS (Non-GAAP) of $0.07 vis-à-vis an EPS (Non-GAAP) of $0.22 reported a year ago. Revenue was also reported approximately 21% lower on a year-over-year (y-o-y) basis at $1.71 billion which deterred the company’s overall performance.

Barrick reported 26% y-o-y lower gold sales volume in the second quarter, in line with the company’s overall lower guidance for the year reflecting its declining reserves and continued instability in its African operations. Additionally, relatively weaker gold prices also aggravated the impact of lower sales volume. The company reported an average realized gold price of $1313 per ounce, roughly 4% higher on a y-o-y basis. Although global trade war uncertainty had fueled the demand for haven-assets, gold prices remained weak due to a stronger dollar during the period. Barrick’s top line was additionally impacted by lower copper sales volume due to operational challenges at its Lumwana mines. Barrick consequently reported a 24% y-o-y decline in its copper sales volume and also lowered its full-year copper sales guidance by almost 10% (assuming mid-points).

Barrick’s bottom line for the quarter was negatively impacted by additional expenses related to planned maintenance at Barrick Nevada roaster and the Pueblo Viejo autoclaves and higher fuel costs. The company expects its second half to be relatively stronger in comparison to its first half with higher output and lower costs. The company has additionally been involved in restructuring its organizational structure, the cost-saving impact of which should be visible by next year.

We have kept our base case estimates unchanged based on the company’s recent results. You can make changes to our assumed figures and arrive at your own fair price estimate for the company by using our interactive dashboard: Q2’18: What To Expect From Barrick Gold In 2018?

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