Polyus PJSC (MIC:PLZL, Financial) released its results for first-quarter 2019 on Tuesday.
Due to a 24% increase in total gold sold to 570,000 ounces, the Russian gold producer reported 22% year-over-year growth in total revenue to $751 million, a 19% increase in operating profit to $396 million and a 9% jump in adjusted net earnings to $243 million. The adjusted earnings before interest, taxes, depreciation and amortization grew 26% to $488 million.
Despite the strong performance, the operating profit margin fell 1 percentage point to 53% and the adjusted net profit margin declined 4 points to 32%.
The adjusted EBITDA margin rose 2.2 points to 65% as a result of improved gold margins, which benefited from lower sustaining capital and selling, general and administrative expenses offsetting the drop in metal prices.
Polyus demonstrated robust performance at all operations, producing 601,000 ounces of gold during the quarter from its mineral deposits in the Krasnoyarsk region of east Siberia, the Irkutsk region of southeast Siberia and the Yakutia region of Russia.
Thus, the all-in sustaining cost was $589 per ounce, down from $664 per ounce in the prior-year quarter. The total cash cost decreased 7% to $358 per ounce thanks to higher byproduct credits and sales volumes.
The free cash flow soared 329% to $339 million as a result of a 46% cut in capital expenditures to $99 million and a 68% increase in operating cash flow to $438 million.
As of March 31, Polyus' balance sheet had $1.56 billion in in cash on hand and equivalents and $3.01 billion in total net debt.
The net debt-adjusted EBITDA ratio also improved from 1.8 in the year-ago quarter to 1.5.
Looking ahead to 2019, Polyus reaffirmed 2.8 million ounces of gold production, reflecting nearly 15% growth from 2018, at a total cash cost of less than $425 per ounce of metal. The operational and financial performance is expected to continue to improve as the miner continues to implement cost-containment initiatives.
The proven and probable gold reserves of the Russian operator account for approximately 60 million ounces.
On Tuesday, the stock was trading around 5,022.50 roubles ($76.80) per share on the Moscow Interbank Currency Exchange. The market capitalization is approximately $10.2 billion.
For the 52 weeks through May 13, the stock climbed nearly 34%, outperforming the VanEck Vectors Gold Miners (GDX, Financial) exchange-traded fund by 39.6%.
The 52-week range is $56.52 to $86.83. The 14-day relative strength index of 46 suggests the stock is neither overbought nor oversold.
The company pays dividends to shareholders every six months. For the second half of 2018, Polyus' board of directors approved a dividend of $2.22 per ordinary share. The forward dividend yield stands at approximately 5.7% versus the industry median of 3.14%.
Disclosure: I have no positions in any securities mentioned.
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