Gold Fields Sep quarter HEPS fall 66%
Posted Thu, 30 Oct 2003
World number four gold miner Gold Fields on Thursday reported headline earnings per share for the September quarter of 35 cents, down 66 percent from 104 cents in the June quarter.
This is below market expectations as gold analysts had expected headline earnings per share to decline 38 percent to 65 cents in the September quarter.
Earnings were significantly lower in the September quarter as a result of above-inflation local wage increases, the stronger rand and a reduction in gains on financial instruments and foreign debt and profits earned on the sale of investments.
The group also reported net earnings per share, excluding gains and losses from financial instruments as well as foreign debt, down 40 percent to 29 cents in the September quarter from 48 cents in the June quarter.
This earnings figure is also below expectations as gold analysts had expected net earnings per share to be up six percent to 51 cents from 48 cents previously.
During the quarter, Gold Fields made a profit on the sale of certain mineral rights and associated assets to world number two gold group AngloGold.
The pre-tax profit on this sale amounted to R187-million and after accounting for the deferred tax release, the total impact on earnings was R240-million ($32-million).
September operating profit fell 21 percent to R570-million from R717-million in the June quarter.
Gold sold during the September quarter was 1.101 million ounces, almost unchanged from the June quarter output.
Total cash costs in the September quarter increased 6.6 percent from R63 369 per kilogram to R67 566/kg and in US dollar terms increased 10.6 percent from $255 per ounce to $282/0z to the rand, strengthening four percent from 7.74 rand to 7.44 rand to the US dollar.
During the quarter the safety performance at the South African operations slipped back slightly from the five-year record high standards achieved during the 2003 financial year.
The lost day injury frequency rate regressed from 13.9 to 15.9, the serious injury frequency rate from 6.6 to 7.2 and the fatal injury frequency rate from 0.23 to 0.31.
During the quarter the Full Compliance Safety Campaign was relaunched at all operations to consolidate the gains made in safety over the past five years.
The operating margin for the group declined from 24 percent to 19 percent in the current quarter.
This was due to a decline in margins at the South African operations from 19 percent in the previous quarter to 11 percent in the current quarter.
Regarding prospects, Gold Fields aid gold output is not expected to be materially different in the December 2003 quarter.
"Should the rand gold price remain at current levels, revenue and operating margins will continue to be under pressure. The lower operating margins currently experienced at the South African operations have necessitated a change in mining strategy at the South African operations resulting in a reduction in marginal tonnage and a review of paylimits," the group said in a statement.
"In the short term, notwithstanding the review of paylimits, efforts are being made to increase production through increased quality volumes and focus on the recovery of old gold. In the longer term efforts are being made to increase productivity," the company added.
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