Polyus Records 50% Growth in Net Profit

The Russian gold operator posts 2nd-quarter figures

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Shares of Polyus PJSC (MIC:PLZL, Financial) climbed 1.23% to 6,929.00 roubles ($106.07) on Tuesday after the Russian miner reported 50% growth in second-quarter adjusted net profit to $365 million.

Thanks to higher refined gold sales volumes and prices, revenue increased 19% to $897 million.

The robust performance of the Olimpiada mine, which is one of the largest mineral deposits in Russia, led to a 14% increase in gold production to 684,000 ounces and a 2% decrease in total cash costs to $352 per ounce of gold sold as fixed costs were spread over a larger output.

The earnings before interest, taxes, depreciation and amortization hit a new record of $604 million in the second quarter, which, compared to the previous quarter, represented 24% growth. The adjusted Ebitda margin increased 200 basis points to 67.3%.

For full fiscal 2019, Polyus confirmed its gold production guidance of 2.8 million ounces at a total cash cost of less than $425 per ounce of metal sold.

Polyus will mine the precious metal from its mineral deposits in Siberia.

The company's proven and probable gold reserves account for approximately 64.4 million ounces as of Dec. 31, 2018, including development and exploration projects.

Operations produced a net debt-adjusted Ebitda ratio of 1.7 for the second quarter, down from 1.5 in the prior-year quarter.

Capital expenditures soared 56% to $154 million, while operating cash flow increased 3% to $451 million. Free cash flow came in at $297 million, down 12.4%.

At the end of the second quarter, Polyus' balance sheet had $1.25 billion in cash on hand and equivalents and $3.64 billion in total net debt.

For the 52 weeks through Aug. 5, the stock climbed 71%, outperforming the VanEck Vectors Gold Miners (GDX, Financial) exchange-traded fund, which gained almost 53% over the same period.

The 52-week range is $60.13 to $106.95. The 14-day relative strength index of 80 suggests the stock is approaching overbought levels.

The company pays semi-annual dividends to shareholders. For the first half of 2019, Polyus' board of directors proposed a dividend of $2.46 per ordinary share or a dividend of $1.23 per depositary share. The dividend record should be scheduled for sometime in October.

Disclosure: I have no positions in any securities mentioned.

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