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Newcrest Mining share price on watch after 178% profit increase

Kenneth Hall
rocket shooting higher

The Newcrest Mining Ltd  (ASX: NCM) share price is on watch this morning after a bumper full-year result headlined by a 178% jump in net profit and 19% dividend increase.

What were Newcrest’s full-year highlights?

For the year ended 30 June 2019, Newcrest reported a statutory net profit after tax (NPAT) of $561 million, up 178% from FY18’s $202 million figure.

On an underlying basis, Newcrest’s NPAT climbed 22%, while free cash flow surged 34% higher to $804 million during the year with all operations coming in free cash flow positive.

The company reported its lowest-ever annual all-in sustaining cost (AISC) of $738 per ounce, which was 12% lower than its $835 per ounce result in 1H18.

Adding to the company’s bumper profits was record gold and copper production from its Cadia Valley operations, as well as a record-low AISC per ounce.

The company’s Lihir operations registered its fourth consecutive year of generating free cash flow greater than $300 million, in another positive for Newcrest shareholders.

Pleasingly for investors, Newcrest’s bumper result comes despite lower realised prices for both gold (down 3% to $1,269 per ounce) and copper (down 10% to $2.78 per pound).

Newcrest also reported higher earnings before interest, tax, depreciation and amortisation (EBITDA) and EBIT margins of 44.6% and 24.7% during the year, both climbing higher on 1H18 figures.

On the balance sheet side, Newcrest lowered its net debt significantly during the year, down by $645 million to $395 million as at year-end, which was a gearing drop from 12.2% to 4.9% in FY19.

Foolish takeaway

By almost any measure, Newcrest’s latest result has been a positive one for investors, and a much-needed one for an August reporting season that has so far seen sliding earnings and lower growth forecasts.

The Aussie gold miner has managed to strengthen its balance sheet even while boosting profits, with the company increasing its cash on hand to $1.6 billion, up 68% from FY18.

The Newcrest Board decided to pay a final dividend of US 14.5 cents per share (cps), up from 11.0 cps in FY18 as investors look set to profit from the company’s strong earnings profile.

This took the total annual dividend received by Newcrest shareholders to US 22.0 cps, up 19% from US 18.5 cps in FY18 as a result of its increased free cash flow figures and bolstered balance sheet strength.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019