Barrick Gold Corp. (GOLD, Financial) fell 4.11% to $12.82 per share on the New York Stock Exchange on Wednesday after the release of disappointing results for the final quarter of 2018 that ended Dec. 31.
Before the opening bell the Canadian gold producer reported a 73% year-over-year decrease in non-GAAP earnings to 6 cents per share, a nearly 15% year-over-year decline in revenues to $1.9 billion and a 5.9% decrease in gold production to 1.262 million ounces.
While Barrick Gold Corp. met consensus on non-GAAP earnings per share, it missed expectations on revenues by $60 million.
Fourth-quarter earnings, revenues and gold output were impacted by lower gold grades and recovery rates and by higher capital expenditures sustained at the mine site. Higher energy costs also impinged on results, as well as lower gold prices.
During the quarter, the company sold gold at an average price of $1,223 per ounce, reflecting a 4.5% fall from the prior-year period, and produced the precious metal at an all-in sustain cost of $788 per ounce of gold sold. Barrick Gold Corp. also produced 109 million pounds of copper at an AISC of $2.95 per pound.
The gold producer also reported results for the entire year of fiscal 2018.
Barrick produced 4.527 million ounces of gold at an AISC of $806 per ounce of metal sold and 383 million pounds of copper at an AISC of $2.82 per pound of copper. The company said that both the production of gold and the production of copper were within the guidance of the company for full-year 2018.
In 2018, Barrick produced cash flow from operations of $1.77 billion, employed $1.41 billion as capital expenditures, produced free cash flow of $365 million and achieved a further cut in the total debt to $5.74 billion. The miner closed the year with total liquidity of $4.6 billion including undrawn lines of credit. Considering the completion of the merger with Randgold Resources Ltd., which took place on Jan. 1, 2019, the combined company has $5.3 billion total liquidity available in cash on hand, short-term investments and undrawn lines of credit.
From the third trimester of 2018, the total debt decreased 11% to $5.74 billion, of which 87.1% is due after 2032 and a portion of less than 1% matures through 2020. Therefore, beneftting from a solid balance sheet, the gold producer decided to hike its annual dividend by 33.34% to 16 cents per common share in 2018 from 12 cents per common share in 2017. With reference to the first quarter of 2019, Barrick Gold Corp. will announce the first cash quarterly dividend of 4 cents sometime in April.
Looking ahead, Barrick Gold has guided for gold production of 5.1 million to 5.6 million ounces and copper production of 375 million to 430 million pounds for full-year 2019. Further, the AISC per ounce of gold sold in 2019 is expected to range between $870 and $920 and the AISC per pound of copper sold in 2019 is guided to be between $2.40 and $2.90.
In addition, proven and probable reserves of gold were 62.3 million ounces and proven and probable reserves of copper were 10.6 billion pounds at Dec. 31, 2018.
The share price of the stock has fallen almost 86% and underperformed the VanEck Vectors Gold Miners ETF (GDX, Financial) by 81% over the past year through Feb. 13. The market capitalization is about $22.4 billion and the share price at close on Wednesday was below the 200-, 100- and 50-day simple moving average lines. The share price belongs to a 52-week range of $9.53 to $14.18.
Barrick Gold Corp. has a price-book ratio of 1.59 versus an industry median of 1.74 and an enterprise value-to-Ebitda of 6.8x compared to an industry median of 9.3x. The Ebitda margin is 42.5% for full-year 2018 versus a margin of 49.1% for full year 2017. The profitability was impacted by lower sales volumes and by higher capital expenditures and energy costs.
Wall Street has issued a hold recommendation rating with an average target price of $14.72 per share of Barrick Gold Corp.
Disclosure: I have no positions in any security mentioned.
