Newmont Mining's Profit Falls Short of Expectations Despite Increase in Production

Strategic Insights -

Newmont Mining Corp. announced that first-quarter profit from its gold unit fell 17 percent, lower than expected, due to decreased gold prices offsetting increased production. The company's 94 percent-owned operating unit, Newmont Gold Co., reported a profit of $32.8 million, or 20 cents a diluted share, down from $39.3 million, or 24 cents, in the previous year. Despite this, the per-share results exceeded analysts' expectations, with the average estimate being 13 cents. Newmont's market value has decreased by 34.8 percent, ranking the company as the second-biggest loser among Forbes 500 companies.

Key Takeaways:

  • Newmont Mining's gold unit profit fell 17 percent in the first quarter, lower than expected, due to decreased gold prices.
  • Newmont Gold Co.'s profit dropped to $32.8 million, or 20 cents a diluted share, from $39.3 million, or 24 cents, in the year-earlier period.
  • Per-share results exceeded the 13-cent average estimate of analysts polled by First Call Corp.
  • Newmont's market value has decreased by 34.8 percent, ranking the company as the second-biggest loser among Forbes 500 companies.
  • The company's revenue rose 6 percent to $378.1 million from $355.1 million, with cash flow from operations increasing to $113.7 million from $107.3 million.
  • Newmont's acquisition of Santa Fe Pacific Gold Corp. in May 1997 was included in the restated 1997 results.
  • Chairman, President, and CEO Ronald Cambre attributed the results to the company's "inherent strength of our properties, the success of the Santa Fe merger, and the disciplined approach to conserving cash."

Statistics:

  • 17% - decrease in Newmont's gold unit profit.
  • $32.8 million - profit at Newmont Gold Co. in the first quarter.
  • 20 cents - diluted share profit at Newmont Gold Co. in the first quarter.
  • $39.3 million - profit at Newmont Gold Co. in the year-earlier period.
  • 24 cents - diluted share profit at Newmont Gold Co. in the year-earlier period.
  • 13 cents - average analyst estimate for per-share results.
  • $31.69 - Newmont Mining's share price on the NYSE.
  • $1.63 - decrease in Newmont Mining's share price.
  • $4.37 billion - Newmont's loss in market value.
  • 34.8% - percentage decrease in Newmont's market value.
  • $378.1 million - revenue at Newmont in the first quarter.
  • $355.1 million - revenue at Newmont in the year-earlier period.
  • 6% - increase in Newmont's revenue.
  • $113.7 million - cash flow from operations at Newmont in the first quarter.
  • $107.3 million - cash flow from operations at Newmont in the year-earlier period.

Sources:

  • Newmont Mining Corp. press release.
  • Forbes magazine, April 20 issue.