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Kinross (KGC) Beats Earnings and Revenue Estimates in Q4

Zacks Equity Research

Kinross Gold Corporation KGC incurred net loss of $27.7 million or 2 cents per share in fourth-quarter 2018, against net profit of $217.6 million or 17 cents in the year-ago quarter.

Barring one-time items, adjusted earnings came in at a penny per share, which beat the Zacks Consensus Estimate of breakeven earnings.

Revenues from metal sales totaled $786.5 million, which declined 2.9% year over year. The figure surpassed the Zacks Consensus Estimate of $757.2 million.

Kinross stated that it has attained cost, production and capital guidance for seventh consecutive year. Also, after successful completion of the Tasiast Phase One expansion, the mine achieved record production in the fourth quarter. The mine’s throughput and recoveries exceeded the company’s expectations.

2018 Highlights

In 2018, the company incurred net loss of $23.6 million or 2 cents per share, against net income of $445.4 million or 36 cents a year ago. The results were impacted by higher income tax expenses in 2018, a reversal of impairment charges associated with the Cerro Casale sale in 2017 and lower operating earnings.

Adjusted net earnings were $128.1 million or 10 cents compared with $178.7 million or 14 cents.

Total revenues fell roughly 2.7% year over year to $3,212.6 million. Total gold production was 2.45 million ounces in 2018 compared with 2.7 million ounces in 2017. The company’s total production for the year met its previous guidance.

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 610,152 ounces in the fourth quarter, down 6.5% year over year. The decline was primarily caused by lower production at Bald Mountain and Fort Knox, partly offset by higher production at Paracatu and Tasiast.

Production cost of sales per gold equivalent ounce increased to $743 from $653 in the prior-year quarter, attributable to higher cost of sales per ounce sold at Fort Knox. All-in sustaining cost per gold equivalent ounce sold declined to $961 from $1,019 in the year-ago quarter.

Margin per gold equivalent ounce sold was $483 in the quarter, down from $623 in the year-ago quarter.

Average realized gold prices was $1,226 per ounce in the quarter, down from $1,276 in the year-ago quarter.

Financial Review

For 2018, adjusted operating cash flow was $874.2 million, down from $1,166.7 million a year ago. Cash and cash equivalents were $349 million, down from $1,025.8 million a year ago.

At the end of 2018, long-term debt amounted to $1,735 million, up from $1,732.6 million in 2017. The company has no scheduled debt maturities due until 2021.

Capital expenditures rose 16.2% year over year to $1,043.4 million in 2018.

Outlook

Kinross provided production and cost guidance for 2019. The company expects gold production of 2.5 million (+/- 5%) gold equivalent ounces at production cost of sales of $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $995 (+/- 5%) per gold equivalent ounce.

Kinross anticipates capital expenditures of $1,050 million (+/- 5%) for the year.

Price Performance

Shares of Kinross have lost 11.4% in the past year compared with the industry’s 2.6% decline.



Zacks Rank & Other Key Picks

Kinross currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space include Kirkland Lake Gold Ltd. KL, The Mosaic Company MOS and Silver Standard Resources Inc. SSRM. While Kirkland currently sports a Zacks Rank #1 (Strong Buy), Mosaic and Silver Standard Resources carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 20.9% for 2019. The company’s shares have surged 118.2% in the past year.

Mosaic has an expected earnings growth rate of 23.5% for 2019. Its shares have rallied 23.5% in a year’s time.

Silver Standard Resources has an expected earnings growth rate of 29.2% for 2019. Its shares have surged 55.8% in a year’s time.

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