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The OceanaGold share price could fall after Q4 profitability plummets

The OceanaGold Corporation  (ASX: OGC) share price could be in for a sell-off this morning after reporting a fall in its Q4 2018 numbers in yesterday afternoon’s full-year earnings result.

The full-year results are OK… But Q4 2018 was soft

For the full year ended 31 December 2018, OceanaGold reported annual revenue of US$773 million and earnings before interest, tax, depreciation and amortization (EBITDA) of US$364 million in a robust year for the company. Net profit after tax (NPAT) after adjusting for unrealized gains/losses on undesignated hedges came in at US$124 million, while the miner generated US$121 million in free cash flow for the year.

On the production side, the company reported gold production of 533.3 thousand ounces (koz), 15.0 kilotonnes (kt) of copper at an all-in sustaining cost (AISC) of US$767 per ounce for the year.

However, despite increasing key metrics on a full-year basis, I think the share price could experience a bit of a sell-off this morning after the company’s year-on-year quarterly earnings were sharply down on Q4 2017 numbers.

Quarterly revenue came in at US$183.3 million for the quarter, down 25% from Q4 2017 numbers, while quarterly EBITDA fell more than 50% to US$73.7 million. It was an even worse story for the company on the adjusted NPAT front which fell 80% to just US$17.4 million, while the company’s statutory NPAT was down nearly 90% to $10.9 million.

The company’s cash flow from operations almost halved to $95.8 million in Q4 2018, down from $178.8 million in Q4 2017 despite being largely flat on a full-year basis.

Positively for shareholders, management announced a 1 cent per share (cps) dividend for shareholders in the full-year results, half of the reported earnings per share (eps) of $0.02.

Foolish takeaway

The OceanaGold share price surged 35% from mid-December 2018 to the start of January on strong Q3 2018 results as the gold sector saw something of a resurgence to finish the year. After the full-year result released after the bell yesterday afternoon, I think there could be some serious selling as investors look to the likes of Northern Star Resources Ltd  (ASX: NST) as an industry alternative.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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