Newcrest share price dips amid higher FY23 dividends but lower profits

Newcrest shareholders will likely get to vote on Newmont’s takeover offer in October.

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The Newcrest Mining Ltd (ASX: NCM) share price is seeking direction on Friday, wobbling from modest losses to modest gains.

Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock closed yesterday trading for $25.95. In morning trade on Friday, shares are swapping hands for $25.85, down 0.4%.

This follows the release of Newcrest’s full financial year results for the 12 months ending 30 June (FY23).

(*Note all figures in US dollars.)

Newcrest share price wobbles on mixed results

  • Underlying profit of $778 million, down from $872 million in FY22
  • Revenue of $4.5 billion, up 7% year on year
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2.1 billion, in line with FY22
  • Net debt up 10% year on year to $1.5 billion
  • Free cash flow of $404 million
  • Fully franked final dividend of 20 US cents per share; total FY23 dividends of 55 US cents per share up 16% year on year

What else happened during the year?

Newcrest reported an 8% increase in gold production over the year to just over 2.1 million ounces. Copper production was up 10% from the prior year to 133,000 tonnes.

But the Newcrest share price won’t be getting any tailwinds today from the 11% fall in full-year profits. The company said that was mainly due to lower copper prices than it realised in FY22, along with higher operating costs. Profits were also impacted by inflation and increased finance costs for its higher levels of debt.

Investors who want to grab the final dividend will need to own Newcrest shares at market close next Thursday. The ASX 200 gold stock trades ex-dividend on 18 August. Those dividends will hit eligible investors’ bank accounts on 18 September. Payments made in Australian dollars will be converted from US dollars at the prevailing exchange rate on 21 August.

Among the biggest news of the year was Newcrest’s binding scheme implementation deed with United States-based gold giant Newmont Corporation (NYSE: NEM) for Newmont to acquire 100% of Newcrest’s shares by way of a scheme of arrangement. Newmont’s initial expressions of interest earlier in the year sent the Newcrest share price sharply higher.

The Newcrest board has unanimously recommended shareholders vote in favour at a Scheme Meeting, which management expects to hold in October.

What did management say?

Commenting on the results that are giving the Newcrest share price a case of the wobbles in morning trade today, interim CEO Sherry Duhe said:

Our balance sheet remains in excellent shape, sitting comfortably within all our financial policy targets as we continued to invest in our organic portfolio of value generating projects…

We made significant progress against our growth strategy with key study milestones achieved at Cadia and Lihir, the signing of the Framework MOU at the world-class Wafi-Golpu copper-gold deposit, and continued success realised through the Brucejack transformation program.

Citing a number of other exploration successes over the year, Duhe added, “Our global gold and copper portfolio is very well placed for the future.”

What’s next?

Looking at what might impact the Newcrest share price in the year ahead, the company is forecasting 2.0 million to 2.3 million ounces of gold production and 120,000 to 140,000 tonnes of copper production, largely in line with FY23’s results.

Newcrest expects an all-in-sustaining cost (AISC), which includes sustaining capital expenditure, of $2.2 billion to $2.6 billion.

Newcrest share price snapshot

The Newcrest share price is up 35% in a year, not including the two dividend payouts.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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