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01/09 23:25
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a strong financial performance with record high cash flows, significant growth in net profit, revenue, and EBITDA. Despite a slight production decrease, operational consistency and a higher gold price have bolstered earnings. The Q&A reveals management's strategic focus on safety and quality, with plans to maintain margins and optimize assets. The record dividend payout further supports a positive outlook. Although some uncertainty remains regarding project timelines, the overall sentiment is positive, likely leading to a 2-8% stock price increase.
Adjusted Free Cash Flow Record high cash flows with adjusted free cash flow reaching just over ZAR 11 billion at a 16% margin, a 54% growth year-over-year. This was driven by a combination of adding high-grade assets and investing in life of mine extension projects.
Headline Earnings Per Share Rose by 26% to ZAR 23.37 per share year-over-year. This increase was supported by operational consistency and a higher gold price received.
Revenue Grew by 20% to ZAR 74 billion from ZAR 61 billion year-over-year, driven by operational consistency and the higher gold price received.
Net Profit Jumped 67% to ZAR 15.6 billion from ZAR 8.7 billion year-over-year, reflecting strong cash generation and operational excellence.
EBITDA Increased by 37% to ZAR 26 billion from ZAR 19 billion year-over-year, supported by operational consistency and higher gold prices.
All-in Sustaining Costs Increased by 17% to ZAR 1.05 million per kilogram or about USD 1,800 per ounce year-over-year. This was due to lower planned production, mine inflation, higher sustaining capital, and royalties on stronger revenue.
Underground Recovered Grades Increased to 6.27 grams per tonne, exceeding upward revised grade guidance. This reflects structurally improved quality of the portfolio.
Production Decreased by 5% to 46 tonnes or 1.48 million ounces year-over-year, due to safety stoppages and inclement weather. However, the company hit the upper end of production guidance.
Net Cash on Balance Sheet Surged by 285% to ZAR 11.1 billion year-over-year, indicating robust cash generation and operational excellence.
Dividend Payout Record total dividend payout of ZAR 2.4 billion, supported by strong cash generation and a robust balance sheet.
Copper Expansion: Copper is highlighted as a key growth area with projects like MAC Copper, Eva Copper, and Wafi-Golpu. MAC Copper acquisition is expected to close in October 2025, adding 2.8 million ounces of gold equivalents in reserves. Eva Copper project is advancing with a feasibility update expected by the end of 2025.
Gold Production: Gold remains the core focus with production guidance steady at 1.4-1.5 million ounces for FY '26. Underground recovered grades are strong at above 5.8 grams per tonne.
Geographical Diversification: The company is diversifying geographically with copper projects in Australia and Papua New Guinea, complementing its South African gold base.
Safety Improvements: Achieved the lowest LTIFR in company history at 5.39 per million hours worked, reflecting improved safety culture.
Operational Excellence: Record cash flows with adjusted free cash flow reaching ZAR 11 billion. Underground recovered grades increased to 6.27 grams per tonne, exceeding guidance.
Portfolio Transformation: The portfolio is shifting towards higher-quality gold and copper assets. By FY '35, 40% of production is expected to come from copper.
Capital Allocation: Strong balance sheet with ZAR 11.1 billion in net cash. Focused on funding growth projects like MAC Copper and Eva Copper while maintaining shareholder returns.
Safety Risks: Despite achieving the lowest LTIFR in company history, the second half of FY '25 saw unacceptable safety performance, including challenges with fall of ground incidents. Safety stoppages and high-risk work verification remain critical to mitigating these risks.
Cost Pressures: All-in sustaining costs increased by 17% to ZAR 1.05 million per kilogram due to mine inflation, higher sustaining capital, and royalties. Additionally, the stronger rand increased U.S. dollar-reported costs.
Production Challenges: Production decreased by 5% to 46 tonnes due to safety stoppages and inclement weather. Future production at Moab Khotsong is expected to dip from 6 tonnes to 4 tonnes between 2027 and 2031 due to delays in the Zaaiplaats feasibility study.
Contractor and Project Delays: Challenges in securing contractors at Moab Khotsong and Mponeng caused delays in project execution. The liquidation of a contractor at Mponeng required renegotiation of commercial terms, impacting project timelines.
Energy Costs and Reliability: High electricity costs and reliance on Eskom pose risks. The company is mitigating this with a 100-megawatt renewable solar plant at Moab Khotsong.
Hedging Losses: A ZAR 4.5 billion hedge loss was reported, impacting financial performance. The company continues to hedge up to 30% of gold production to manage margin stability.
Operational Costs: Labor and electricity costs make up 72% of group costs, with wage inflation and power tariffs being predictable but significant contributors to overall expenses.
Future Copper Projects: The MAC Copper acquisition and Eva Copper project require significant capital investment and carry execution risks, although they are expected to enhance long-term portfolio quality.
FY '26 Production Guidance: Production guidance remains steady at 1.4 million to 1.5 million ounces, with underground recovered grades above 5.8 grams per tonne. All-in sustaining costs are planned to rise to between ZAR 1.15 million and ZAR 1.22 million per kilogram due to mining inflation and higher sustaining capital.
Capital Expenditure for FY '26: Total capital expenditure is projected to rise to ZAR 12.95 billion, driven by fleet replacement at Hidden Valley mine and advancing projects at Moab Khotsong, Mponeng, and Mine Waste Solutions.
MAC Copper Transaction: The MAC Copper transaction is expected to close in October 2025, pending shareholder approval. This acquisition will add over 12 years of reserve life and a pathway to more than 40,000 tonnes of copper per annum.
Eva Copper Project: A final investment decision on the Eva Copper project is expected later in 2025. The project is anticipated to produce 55,000 to 60,000 tonnes of copper and around 14,000 ounces of gold annually over a 15-year life of mine.
Copper-Gold Production Outlook by FY '35: By FY '35, approximately 40% of production is expected to come from copper, supported by Eva, MAC Copper, and Wafi-Golpu projects.
Renewable Energy Initiatives: A 100-megawatt solar plant at Moab Khotsong is under development to reduce reliance on Eskom and mitigate energy inflation.
Hidden Valley Mine Priorities for FY '26: Focus on life of mine extension studies beyond 2030 and the dewatering cyclone project to optimize tailing storage facility deposition.
Moab Khotsong and Mponeng Production Outlook: Life of mine extensions are underway, with steady-state production expected at 200,000 to 250,000 ounces annually. A temporary dip in production at Moab Khotsong is anticipated between 2027 and 2031.
Record Final Dividend: Harmony Gold Mining Company Limited announced a record final dividend of ZAR 2.4 billion for FY '25.
Total Dividend Per Share: The total dividend per share for FY '25 was ZAR 3.82 or USD 0.21 per share.
Dividend Yield: The dividend yield was 1.6%, supported by a 50% share price increase.
Shareholder Returns: Harmony continues to balance delivering shareholder returns while investing in disciplined growth.
Capital Allocation Strategy: The company emphasizes returning cash to shareholders today while building for tomorrow.
The earnings call presents a strong financial performance with record high cash flows, significant growth in net profit, revenue, and EBITDA. Despite a slight production decrease, operational consistency and a higher gold price have bolstered earnings. The Q&A reveals management's strategic focus on safety and quality, with plans to maintain margins and optimize assets. The record dividend payout further supports a positive outlook. Although some uncertainty remains regarding project timelines, the overall sentiment is positive, likely leading to a 2-8% stock price increase.
The earnings call highlights strong financial performance with increased revenue, net profit, and cash flow, alongside controlled costs. Despite inflationary pressures, the company maintains a solid cash position and has declared a record dividend. The Q&A section reveals management's commitment to shareholder returns and disciplined capital allocation, though some uncertainties remain regarding future dividends and project timelines. Overall, the financial strength and positive outlook suggest a likely stock price increase.
The earnings report shows strong financial performance with significant revenue, profit, and cash flow growth. Despite inflationary pressures, the company has managed to control costs and expand margins. The positive sentiment is reinforced by a substantial interim dividend payout and a strong net cash position. However, regulatory and supply chain challenges pose risks. The Q&A section indicates a cautious but optimistic approach to shareholder returns and project execution, which aligns with the positive financial outlook. Overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
The earnings call summary indicates robust financial performance with significant revenue, profit, and cash flow increases, alongside cost control and a strengthened balance sheet. The Q&A section reveals optimism in beating guidance and maintaining high grades, though some concerns about CapEx clarity and leadership transition exist. Overall, the strong financial metrics and optimistic guidance suggest a likely strong positive stock price reaction.
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