Harmony Gold Mining Co. Ltd. (HMY) recorded net loss (excluding items) of 2 cents per share in second-quarter fiscal 2014 (ended Dec 31, 2013) compared with earnings of 18 cents per share recorded in the year-ago quarter.
On a reported basis, Harmony Gold posted a net loss from continuing operations of $10 million in the second quarter as against net profit from continuing operations of $77 million in the prior-year quarter.
Revenues and Costs
Revenues decreased roughly 24% year over year to $402 million in the second quarter from $532 million registered in the year-ago quarter. However, revenues almost remained flat versus the sequentially prior quarter.
Gold production increased 4.9% year over year to 305,913 ounces (oz). However, gold production decreased marginally by 1.2% from 309,773 oz recorded in the prior quarter.
Operating profit for the second quarter was $97 million compared with $188 million a year ago and $104 million in the sequential quarter. The sequential decline was due to a 3% decrease in gold price received as well as stable gold production.
Gold ounces sold edged down 1.9% year over year to 315,014 oz. However, gold ounces sold increased 4.8% from 300,703 oz recorded in the prior quarter.
Cost of sales decreased 6.9% year over year to $377 million in the second quarter. Cash operating costs decreased 14.9% year over year to $949 per oz and declined 6.3% sequentially from $1,013 per oz. All-in-sustaining costs also declined 3.3% sequentially to $1,222 per oz from $1,264 per ounce recorded in the prior quarter.
Financial Overview
Cash and cash equivalents decreased 24.7% to $222 million as of Dec 31, 2013, from $295 million as of Dec 31, 2012. Cash flow generated from operating activities was $67 million as of Dec 31, 2013, compared with $136 million as of Dec 31, 2012.
Outlook
Harmony Gold has positioned itself to remain sustainable for many years to come, managing costs and production to ensure profitability at all gold prices. The company has placed itself to thrive at current gold price environment and provide investors with attractive returns when market conditions improve. By the end of this fiscal year (Jun 2014), Harmony Gold plans to reduce its costs to a sustainable average of between $1,100/oz and $1,150/oz.
Harmony Gold, which is one of the prominent South African gold mining companies along with AngloGold Ashanti Ltd. (AU) and Gold Fields Ltd. (GFI), currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the gold mining industry is Lake Shore Gold Corp. (LSG), holding a Zacks Rank #2 (Buy).
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