Why the Newcrest Mining (ASX:NCM) share price is up 5%

The Newcrest Mining (ASX: NCM) share price opened strongly higher in morning trade, up 5%. We take a look at the company’s latest results.

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The Newcrest Mining Ltd (ASX: NCM) share price leapt 5.38% this morning and is trading at $25.56 at the time of writing.

The gains come following the release of the company’s results for the first half of the 2021 financial year.

What did Newcrest Mining report?

In this morning’s release to the ASX, Newcrest Mining revealed that historically high gold prices coupled with its own strong operating performance had delivered record free cash flow over the financial half-year of $439 million.

The company’s statutory profit was $553 million, an increase of 134% from the previous corresponding period. Underlying profit, also $553 million, was 98% higher.

Revenue of $2.17 billion was up 21%, while earnings per share (EPS) increased 121% over the first-half FY20 results.

Newcrest reported an all-in-sustaining cost margin of $842 per ounce, an increase of 48%. Its realised gold price of $1,826 per ounce was up 26% from the $1,446 per ounce realised in the 6 months ending 31 December 2019.

On the environmental front, Newcrest reported it’s on track to reduce its emissions intensity by 30% by 2030.

The company also announced a new dividend policy, targeting dividends of 30–60% of annual free cash flow. The previous policy targeted 10–30% shareholder returns. Newcrest will pay an interim dividend of 15 US cents per share (cps), fully franked. That’s 100% more than the previous year.

Addressing the results, Newcrest CEO Sandeep Biswas said:

In 2018, we set ourselves some ambitious targets to Forge a Stronger Newcrest. Our progress and achievements over the past three years has put us in a very strong position to not just weather the global uncertainty associated with COVID-19, but to keep our eyes firmly on our future growth agenda.

We have a fabulous position in our industry, with a long reserve and resource life, a unique set of technical skills, a very strong balance sheet, numerous organic growth options in progress and an exciting exploration pipeline.

Looking ahead, Newcrest maintained its guidance for copper and gold production for the 2021 financial year. It expects gold production will be in the higher end of its guidance range, noting that this remains subject to market and operating conditions. The company also flagged COVID-19 as a potential wildcard in its forecast operations.

Newcrest Mining share price snapshot

Newcrest’s share price has been trending steadily lower over the past 6 months, down 25% since 11 August. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 12% over that same time.

With this morning’s intraday moves factored in, year-to-date the Newcrest share price is down 2%.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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