TOP NEWS: Polymetal 2017 Profit Falls, Retains Production Guidance

12th Mar 2018 08:45

LONDON (Alliance News) - Polymetal International PLC on Monday said higher costs and the absence of foreign exchange gains led to a fall in 2017 earnings, as the precious metals company reiterated its annual gold and production guidance for the next two years.

The company recorded a profit of USD354 million for 2017, down 10% from USD395 million in the year ago period, on a revenue of USD1.82 billion and USD1.58 billion, respectively. The 15% year-on-year rise in revenue was primarily driven by growth in gold production and sales.

However, net profit attributable to shareholders fell to USD444 million in 2017 from USD619 million.

Adjusted earnings before interest, taxes, depreciation and amortisation fell 2% year-on-year to USD745 million due to increased costs. The adjusted Ebitda margin fell to 41% from 48%.

Group total cash costs for 2017 stood at USD658 per gold equivalent ounce, up 15% from 2016 levels and at the lower end of the company's revised guidance of USD650 to USD675 per per gold equivalent ounce. Total capital expenditure stood at USD383 million, up 41%.

The rise in costs was mainly attributed to strengthening of Russian rouble on the back of a recent oil price rally and stabilising macroeconomic conditions in the country.

For 2017, total gold equivalent production increased 13% year-on-year to 1.4 million ounces, 2% above the company's initial production guidance. Gold production was up 21% year-on-year at 1.1 million ounces.

Full year silver production was down 8% to 26.8 million ounces compared to 2016.

The growth in gold production was driven by contribution from the company's fully ramped-up Svetloye heap leach, as well as a strong performance at Komar, Omolon and Amursk/Albazino, Polymetal said.

Polymetal declared a final dividend of 30 cents per share, giving a total payout of 44 cents for the year, up 5%.

The company reiterated its production guidance for 2018 and 2019 of 1.55 million ounces and 1.7 million ounces of gold equivalent, respectively.

For 2018, total cash costs are expected to be in the range of USD650 to USD700 per gold equivalent ounce, while all-in sustaining costs are expected at USD875 to USD925 per gold equivalent ounce. The anticipated increase in costs comes on the back of rising diesel prices in Russia and further potential strengthening of the rouble, the company said.

"I am delighted to report strong operational delivery and robust earnings for the year," said Chief Executive Vitaly Nesis.

"While we have reached peak capital expenditure during 2017 ahead of the launch of the Kyzyl project in 3Q 2018, the group continued to deliver positive free cash flow and generate meaningful cash returns to our shareholders," he added.

Separately, the company said M L S De Sousa-Oliveira will join the board as independent non-executive director, effective April 25. Oliveira currently is a senior independent director and chairman of the audit committee at Antofagasta PLC.

The London-listed company also said that Russell Skirrow and Len Homeniuk have decided not to stand for re-election as directors at the company's upcoming annual general meeting on April 25.

Shares in the company were down 1.9% at 770.00 pence in early trade on Monday.

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