Harmony Gold Mining Co. Ltd ((HMY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Harmony Gold Mining Co. Ltd’s recent earnings call painted a picture of robust financial and operational performance, with record cash flows and improved safety metrics. Despite these achievements, the company faced challenges in the second half, notably in safety performance and rising production costs. Strategic initiatives in copper and a strong balance sheet position the company well for future growth.
Consistent Production Guidance Achievement
Harmony has marked its 10th consecutive year of meeting production guidance, showcasing its operational excellence and effective capital allocation strategies. This consistency underscores the company’s ability to deliver on its promises and maintain investor confidence.
Record Financial Performance
The company reported record-high cash flows, with adjusted free cash flow surpassing ZAR 11 billion at a 16% margin. Headline earnings per share increased by 26% to ZAR 23.37, and a record final dividend of ZAR 2.4 billion was declared, highlighting Harmony’s strong financial health.
Improved Safety Metrics
Harmony achieved its lowest ever Lost Time Injury Frequency Rate (LTIFR) at 5.39 per million hours worked, a significant milestone despite facing challenges in the latter half of the year. This improvement reflects the company’s commitment to safety and operational efficiency.
High-Grade Mining Success
The company reported an increase in underground recovered grades to 6.27 grams per tonne, exceeding its upward revised grade guidance. This success in high-grade mining is a testament to Harmony’s strategic focus on quality over volume.
Strong Balance Sheet and Cash Position
Harmony’s net cash on the balance sheet surged by 285% to ZAR 11.1 billion, with available liquidity increasing significantly to ZAR 20.9 billion. This strong financial position provides the company with the flexibility to pursue growth opportunities.
Strategic Growth in Copper
The acquisition of MAC Copper and progress on the Eva Copper project are set to bolster Harmony’s portfolio, positioning the company for future growth and diversification in the copper sector.
Safety Challenges in Second Half
Despite overall improvements, the second half of the financial year saw unacceptable safety performance. Harmony is actively working on addressing these challenges to ensure the safety of its workforce.
Production Decrease
Group production decreased by 5% to 46 tonnes or 1.48 million ounces, aligning with the company’s strategic focus on quality over quantity. This approach aims to enhance long-term profitability.
Increased Costs
The company experienced a 17% increase in all-in sustaining costs to ZAR 1.05 million per kilogram, driven by lower production, mine inflation, and higher royalties. This rise in costs poses a challenge that Harmony is addressing through strategic initiatives.
Contractor Challenges
Harmony faced difficulties in securing contractors for projects at Moab Khotsong and Mponeng. To mitigate this, internal teams have been mobilized to maintain project progress.
Potential Production Gap
A potential production gap at Moab Khotsong is anticipated between 2027 and 2031 due to delays in the Zaaiplaats feasibility study. Harmony is working on strategies to address this potential dip in production.
Forward-Looking Guidance
Looking ahead, Harmony plans to maintain steady production guidance for FY ’26, targeting between 1.4 and 1.5 million ounces. The company expects underground recovered grades to remain strong at above 5.8 grams per tonne. Progress in the MAC Copper acquisition and Eva Copper project is anticipated to significantly enhance future production.
In summary, Harmony Gold Mining Co. Ltd’s earnings call highlighted a strong financial and operational performance, with record cash flows and improved safety metrics. Despite facing challenges such as increased production costs and safety issues in the second half, the company’s strategic initiatives in copper and a robust balance sheet position it well for future growth. Investors can remain optimistic about Harmony’s ability to navigate these challenges and capitalize on new opportunities.