Gold Fields Limited (Gold Fields) issued its voluntary trading statement and operational performance report for the first half of 2023 (H1 2023). The company revealed a decrease in earnings compared to the same period last year, attributing it to lower gold volumes sold and higher operating costs.
Financial Performance:
Gold Fields anticipates a decline in headline earnings per share for H1 2023, projecting a range between US$0.49 and US$0.53 per share. This reflects a 9% to 16% drop compared to the headline earnings of US$0.58 per share reported for H1 2022. The decrease in earnings is primarily due to lower gold volumes sold and higher operating costs. The company faced challenges driven by mining inflation, resulting in higher amortisation and depreciation expenses due to increased ounces mined. However, the impact was partially offset by a higher gold price.
Similarly, basic earnings per share for H1 2023 are expected to range between US$0.49 and US$0.53 per share, indicating a 7% to 14% decline from the US$0.57 per share reported in H1 2022. Normalised earnings per share for H1 2023 are also expected to experience a decrease, with a projected range of US$0.49 to US$0.53 per share, 5% to 13% lower than the normalised earnings of US$0.56 per share reported for H1 2022.
Operational Performance:
In the second quarter of 2023 (Q2 2023), Gold Fields reported attributable gold equivalent production of 577 thousand ounces (koz), consistent with Q1 2023 figures. However, All-in costs (AIC) for the quarter increased to US$1,454 per ounce (oz), compared to US$1,343/oz in Q1 2023. All-in sustaining costs (AISC) also saw a rise, with Q2 2023 costs projected at US$1,279/oz, up from US$1,152/oz in Q1 2023. The increase in costs was primarily driven by lower gold sales, higher operating expenses due to mining inflation, and increased capital expenditure.
For H1 2023, the company’s attributable gold equivalent production is expected to be 1,154koz, marking a 4% decrease compared to H1 2022. AIC for H1 2023 is projected to be US$1,398/oz, representing a 3% increase year-on-year (YoY). AISC for H1 2023 is expected to be US$1,215/oz, indicating a 6% increase YoY. The increase in costs is attributed to lower gold sales and higher operating expenses, partially offset by a reduction in project capital expenditure.
Investor Outlook:
Gold Fields has not yet provided a detailed explanation of the factors that contributed to the operational challenges faced during H1 2023. Investors and stakeholders are keen to gain insights into the company’s plans to address the cost inflation and volume issues that have impacted earnings.
The company is set to release its H1 2023 financial results on Thursday, 17 August 2023. Investors will be closely monitoring the financial report to gain a comprehensive understanding of the performance drivers and the company’s strategies to mitigate future operational challenges.
Conclusion:
Gold Fields Limited faces earnings decline in H1 2023, driven by lower gold volumes sold and higher operating costs. While a higher gold price partially offsets the impact, the company’s operational challenges, such as mining inflation and increased capital expenditure, have led to decreased earnings per share and higher production costs. Investors will be eagerly awaiting the release of the H1 2023 financial results to gain more clarity on the company’s performance and future outlook amidst the challenging operating environment.
