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Kinross (KGC) Misses Q3 Earnings and Revenues Estimates

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Kinross (KGC) Misses Q3 Earnings and Revenues Estimates

Increase in income tax expense and lower margins hurt Kinross' (KGC) Q3 results. Nevertheless, the company keeps 2018 view unchanged.

Kinross Gold Corporation KGC reported net loss of $104.4 million or 8 cents per share in third-quarter 2018 results, against net profit of $60.1 million or 5 cents in the year-ago quarter. The results were impacted from lower margins and higher income tax expense.

Barring one-time items, adjusted loss in the quarter were 4 cents per share, which missed the Zacks Consensus Estimate of earnings of a penny per share.

Revenues totaled $753.9 million, which declined 8.9% from $828 million in the year-ago quarter. The decline is attributed to a fall in gold equivalent ounces sold and the average realized gold price. The figure missed the Zacks Consensus Estimate of $760.2 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 586,260 ounces in the quarter, down 10.4% year over year. Production cost of sales per gold equivalent ounce increased to $777 from $662 in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold increased to $1,049 from $937 in the year-ago quarter.

Margin per gold equivalent ounce sold was $432 in the quarter, down from $621 in the year-ago quarter.

Average realized gold prices was $1,209 per ounce in the quarter, down from $1,283 in the year-ago quarter.

Financial Review

Adjusted operating cash flow was $143.2 million, down from $320.8 million in the prior-year quarter. Cash and cash equivalents were $470.1 million as of Sep 30, 2018, down from $992.1 million as of Sep 30, 2017.

Long-term debt amounted to $1,734.4 million, up from $1,732 million in the prior-year quarter.  The company has no scheduled debt maturities due until 2021.

Capital expenditures rose to $276.4 million from $204.7 million in the prior-year quarter.  

Outlook

Kinross reaffirmed production and cost outlook for 2018. The company continues to expect gold production of 2.5 million (+/- 5%) gold equivalent ounces. Production cost of sales guidance for the year has been kept unchanged at $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $975 (+/- 5%) per gold equivalent ounce.

For 2018, Kinross continues anticipating capital expenditures of roughly $1,075 million (+/- 5%), including non-sustaining capital of around $680 million and sustaining capital of $355 million.

Price Performance

Shares of Kinross have lost 17.6% in the past three months compared with the industry’s 6.1% decline.



Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the basic materials space are Methanex Corporation MEOH, CF Industries Holdings, Inc. CF and Domtar Corporation UFS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has expected long-term earnings growth rate of 15%. Its shares have rallied 31.8% in the past year.

CF Industries has expected long-term earnings growth rate of 6%. Its shares have gained 41.7% in a year.

Domtar has expected long-term earnings growth rate of 5%. Its shares have moved up 8.3% in the past year.

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