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St Barbara share price on watch as profit slumps 24% lower

The St Barbara Ltd (ASX: SBM) share price is one to watch this morning as the Aussie gold miner reported a 24% drop in underlying net profit after tax (NPAT).

Why is the St Barbara share price on watch?

St Barbara reported total gold production up 5.4% to 381,887 ounces at an all-in sustaining cost (AISC) of $1,369 per ounce, up 26.8% from the year prior.

The Aussie gold miner sold 381,105 ounces of gold at an average realised price of $2,123 per ounce, generating sales revenue of $827.7 million.

Lower output from the group’s Leonara and Simberi operations were offset by strong production from St Barbara’s Atlantic Gold acquisition.

This comes as global gold prices continue to surge to new record highs amid the uncertainty created by the coronavirus pandemic.

Gross profit and earnings before interest, tax, depreciation and amortisation (EBITDA) both jumped 26.1% higher to $442.9 million and $415.7 million, respectively.

However, a significant increase in depreciation and amortisation expenses affected the company’s bottom line, resulting in underlying NPAT of $108.5 million.

Cash contribution from operations totalled $273.2 million with net operating cash flow climbing 16.1% to $279.5 million.

The St Barbara share price has been rocketing higher this year and is up 24.2% prior to this morning’s open. The group’s FY20 return on equity came in at 10% with a 7% yearly change in closing share price.

The Aussie miner reported a $98 million net cash position as at 30 June 2020. That comprises cash and term deposits of $450.5 million offset by $307 million of debt.

Dividend

All eyes will be on the St Barbara share price this morning as management announced a 4 cents per share (cps) final dividend.

Including the 4 cps interim dividend, St Barbara will pay out a full-year dividend of 8 cps. Based on Friday’s closing price of $3.39 per share, that translates to a dividend yield of 2.4% per annum.

Outlook

Unlike many ASX companies this earnings season, St Barbara did provide FY21 guidance.

The Aussie gold miner expects gold production of 370,000 to 410,000 ounces this financial year. St Barbara is forecasting an AISC of $1,360 to $1,510 per ounce for those production levels.

Sustaining capital expenditure of $97 million to $115 million is expected with growth capital of $49 million to $57 million. Management is expecting exploration expenditure of between $30 million to $35 million.

COVID-19 continues to present challenges with St Barbara citing a focus on liquidity and capital management in the short-term.

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Motley Fool contributor Ken 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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