Goldcorp’s 1Q18 earnings miss
Goldcorp (GG) reported its 1Q18 results on Wednesday, April 25, after the market closed. The gold sector’s earnings were kick-started by Barrick Gold (ABX) on April 23 with an earnings beat. But Goldcorp fell short of market expectations for earnings. Its earnings per share came in at $0.08, missing the consensus by $0.03 and significantly lower than $0.20 in 1Q17. The stock finished the day 2.9% lower and was trading down ~2% in after-hours trading. The miss is in contrast to its earnings beat in 4Q17.
Lower production and higher costs
The miss was mainly due to lower-than-expected production and higher costs. Its gold production slipped 10% year-over-year (or YoY) to 590,000 ounces. The higher average realized gold prices were offset by lower volumes. However, part of the lower production was expected due to the following:
- sale of the Los Filos mine in April 2017
- closure of the Marlin mine in 2Q17
- lower volumes at Penasquito due to anticipated lower-grade ore transition
Goldcorp’s all-in sustaining costs (or AISC) came in at $810 per ounce for gold, which was 1.3% higher YoY. The increase was mainly due to lower gold sales, lower byproduct credits, and higher sustaining capital.
The growth vision reiterated
The company reiterated its full-year guidance of 2.5 million ounces (+/-5%) at an AISC of $800 per ounce (+/-5%). GG’s CEO David Garofalo said, “Our operations again delivered on target quarterly results while we continue to execute very well on our robust pipeline of growth projects, which together with excellent exploration results from across our portfolio, continues to enhance confidence in our 20/20/20 plan of growing production and reserves by 20%, and reducing AISC by 20% by 2021.”
Goldcorp is among the very few gold stocks (GDX) that have risen year-to-date. The others are Newmont Mining (NEM) and Harmony Gold (HMY). Goldcorp’s growth vision seems to be driving investors toward the stock. As long as the current weakness is viewed as temporary, the stock could recover. We’ll get more of a sense of that during the earnings call on April 26 at 10:00 AM PST. Keep an eye on our Commodities page for a detailed analysis of Goldcorp’s 1Q18 results and the earnings call highlights.
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