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Kinross (KGC) Beats Earnings and Revenue Estimates in Q1

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Kinross Gold Corporation KGC reported net profit of $106.1 million or 8 cents per share in first-quarter 2018, down 21.2% from $134.6 million or 11 cents recorded in the year-ago quarter.

The company’s adjusted earnings (excluding one-time items) were $125.2 million or 10 cents per share, more than five-fold rise from $23.4 million or 2 cents recorded a year-ago. Earnings per share surpassed the Zacks Consensus Estimate of 5 cents.

Revenues of $897.2 million in the quarter rose around 12.7% from $796.1 million recorded in the year-ago quarter owing to an increase in gold equivalent ounces sold and a higher realized gold price. Revenues beat the Zacks Consensus Estimate of $816 million.



Kinross Gold Corporation Price, Consensus and EPS Surprise

 

Kinross Gold Corporation Price, Consensus and EPS Surprise | Kinross Gold Corporation Quote

 

Operational Performance

Attributable gold production was 653,937 ounces for the quarter, down 2.7% year over year. Production cost of sales per gold equivalent ounce declined to $658 from $701 recorded in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold declined to $846 from $953 a year ago.

Margin per gold equivalent ounce sold was $672 in the quarter, up from $519 a year ago.

Average realized gold prices was $1,330 per ounce in the quarter, up 9% from $1,220 a year ago.

Financial Review

Adjusted operating cash flow was $363.7 million for the quarter, up from $250.9 million in the prior-year quarter. Cash and cash equivalents were $997.9 million as of Mar 31, 2018, up from $819 million as of Mar 31, 2017.

Long-term debt was essentially flat year over year at $1,733.2 million and there are no scheduled debt repayments due for the company until 2021.

Capital expenditures rose to $246.9 million in the quarter from $178.9 million in the prior-year quarter owing to higher spending at Tasiast and Round Mountain, partly offset by lower spending at Fort Knox, Paracatu and Chirano.

Development Updates

Kinross announced that it is proceeding with the Round Mountain Phase W and Bald Mountain Vantage projects in Nevada. Kinross has almost completed the Phase One expansion of the Tasiast mine and the project remains on track to achieve throughput capacity of 12,000 ton per day by the end of June 2018.

The company expects to commence mining of high-grade ore at Moroshka in the second half of the year. Moreover, the Fort Knox Gilmore feasibility study in Alaska is expected to be completed in June 2018.

Outlook

The company has reaffirmed its production and cost outlook for 2018. Kinross expects gold production of 2.5 million gold equivalent ounces in 2018. Production cost of sales for the year has been forecast at $730 per gold equivalent ounce. All-in sustaining cost is expected to be $975 per gold equivalent ounce.

Kinross sees capital expenditure of roughly $1,075 million (+/- 5%) for 2018.

Price Performance

Shares of Kinross have moved up 5.6% over a year, outperforming the 2.3% decline recorded by its industry.

 



 

Zacks Rank & Stocks to Consider

Kinross currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the basic materials space worth considering are FMC Corporation FMC, Huntsman Corporation HUN and Kronos Worldwide Inc. KRO.  All three stocks sport a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corporation has an expected long-term earnings growth rate of 11.3%.  Its shares have gained around 18% over a year.

Huntsman has an expected long-term earnings growth rate of 8.3%.  Its shares have moved up around 14.5% over a year.

Kronos has an expected long-term earnings growth rate of 5%.  Its shares have gained around 29% over a year.

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