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Kinross (KGC) Misses Q3 Earnings and Revenues Estimates

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Kinross Gold Corporation (KGC - Free Report) reported net loss of $104.4 million or 8 cents per share in third-quarter 2018 results, against net profit of $60.1 million or 5 cents in the year-ago quarter. The results were impacted from lower margins and higher income tax expense.

Barring one-time items, adjusted loss in the quarter were 4 cents per share, which missed the Zacks Consensus Estimate of earnings of a penny per share.

Revenues totaled $753.9 million, which declined 8.9% from $828 million in the year-ago quarter. The decline is attributed to a fall in gold equivalent ounces sold and the average realized gold price. The figure missed the Zacks Consensus Estimate of $760.2 million.

Kinross Gold Corporation Price, Consensus and EPS Surprise

Kinross Gold Corporation Price, Consensus and EPS Surprise | Kinross Gold Corporation Quote

Operational Performance

Attributable gold production was 586,260 ounces in the quarter, down 10.4% year over year. Production cost of sales per gold equivalent ounce increased to $777 from $662 in the prior-year quarter. All-in sustaining cost per gold equivalent ounce sold increased to $1,049 from $937 in the year-ago quarter.

Margin per gold equivalent ounce sold was $432 in the quarter, down from $621 in the year-ago quarter.

Average realized gold prices was $1,209 per ounce in the quarter, down from $1,283 in the year-ago quarter.

Financial Review

Adjusted operating cash flow was $143.2 million, down from $320.8 million in the prior-year quarter. Cash and cash equivalents were $470.1 million as of Sep 30, 2018, down from $992.1 million as of Sep 30, 2017.

Long-term debt amounted to $1,734.4 million, up from $1,732 million in the prior-year quarter.  The company has no scheduled debt maturities due until 2021.

Capital expenditures rose to $276.4 million from $204.7 million in the prior-year quarter.  

Outlook

Kinross reaffirmed production and cost outlook for 2018. The company continues to expect gold production of 2.5 million (+/- 5%) gold equivalent ounces. Production cost of sales guidance for the year has been kept unchanged at $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost is expected to be $975 (+/- 5%) per gold equivalent ounce.

For 2018, Kinross continues anticipating capital expenditures of roughly $1,075 million (+/- 5%), including non-sustaining capital of around $680 million and sustaining capital of $355 million.

Price Performance

Shares of Kinross have lost 17.6% in the past three months compared with the industry’s 6.1% decline.



Zacks Rank & Stocks to Consider

Kinross currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Methanex Corporation (MEOH - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Domtar Corporation (UFS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has expected long-term earnings growth rate of 15%. Its shares have rallied 31.8% in the past year.

CF Industries has expected long-term earnings growth rate of 6%. Its shares have gained 41.7% in a year.

Domtar has expected long-term earnings growth rate of 5%. Its shares have moved up 8.3% in the past year.

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