Reporting season: Newcrest
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Where Newcrestï¿½s earnings above, in line with, or below expectations?
Mat Hodge: So the result was just - it was basically in line but slightly below. Basically, costs were bit higher than we're expecting. Corporate costs have gone up quite a lot in the last little bit. That was the primary reason otherwise operationally it was pretty much in line.
Was the dividend above, in line with, or below expectations?
Hodge: The dividend was bit less than we expected. I guess, the company has given a better explanation on the roll of the special dividend. We were kind of expecting Newcrest to be able to hold the dividend steady, but it hasn't done that and it's basically saying we're spending more CapEx at the moment, so we won't have specials at this time. But in the future if we're spending less on capital expenditure and operating cash flow is strong then we'll look to pay that out as special.
What were the key drivers of the result?
Hodge: If we take a step back and look at the 2012 for Newcrest, pretty soft year. They had some interruptions from weather and things like that. Basically the earnings, well the ENPAT was flat year-on-year, earnings were less and that's because there was more shares on issue over the year with the full year of Lihir. So, basically the result was slightly down and it's a pretty weak result for them. And things will start to improve once the two big projects Lihir Expansion and Cadia East kick off.
Was there anything about the result that surprised you?
Hodge: The change in the guidance is the big thing with this result and it looks like Newcrest is going to be much more scrupulous when it comes to future capital expenditures. They've kind of reined in growth expectations quite a bit. Some projects have gone beyond the five year outlook period - they have sort of dropped off. The company said they can bring them back if they want to, but basically they're just trying not to spend too much money while capital expenditure costs are at the peak and that seems fairly sensible to me. So, it looks like probably large dividends but off of a small base are going to be a focus for a little while.
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