Last close As at 05/08/2026
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Research: Metals & Mining
Notwithstanding COVID-19, Newmont’s underlying Q220 results were nothing if not solid. Unsurprisingly, gold production was down 220koz or 14.9% cf Q120; however, the realised gold price was 8.4% higher, such that sales were down just 8.4% and largely balanced by an 8.9% reduction in costs and expenses (despite an additional US$125m in COVID-19 related care and maintenance costs). Results in Q2 did not have the benefit of a net US$404m in (effectively) exceptional gains in Q1. In addition, the tax rate swung from a net benefit to a 29.8% charge on pre-tax profits. Nevertheless, on an underlying basis, adjusted net income declined just 19.9% q-o-q to US$261m, or US$0.32/share. Including lease obligations, net debt improved from US$3.03bn to US$2.87bn after US$388m in free cash flow generation in the three-month period.
Newmont Corporation |
Q220 results
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Metals & mining |
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31 July 2020 |
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Newmont Corporation is a client of Edison Investment Research Limited |
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Notwithstanding COVID-19, Newmont’s underlying Q220 results were nothing if not solid. Unsurprisingly, gold production was down 220koz or 14.9% cf Q120; however, the realised gold price was 8.4% higher, such that sales were down just 8.4% and largely balanced by an 8.9% reduction in costs and expenses (despite an additional US$125m in COVID-19 related care and maintenance costs). Results in Q2 did not have the benefit of a net US$404m in (effectively) exceptional gains in Q1. In addition, the tax rate swung from a net benefit to a 29.8% charge on pre-tax profits. Nevertheless, on an underlying basis, adjusted net income declined just 19.9% q-o-q to US$261m, or US$0.32/share. Including lease obligations, net debt improved from US$3.03bn to US$2.87bn after US$388m in free cash flow generation in the three-month period.
Newmont reiterates FY20 outlook and guidance
In the process of announcing its results, Newmont has also reiterated its post-COVID-19 guidance of attributable production of 6.0Moz for FY20 (cf 1.26Moz in Q220) and all-in sustaining costs (AISC) of US$1,015/oz (cf US$1,097/oz in Q220), albeit costs attributable to sales are now expected to be 1.9% lower at US$760/oz (cf US$775/oz previously and US$748/oz in Q220). Regionally, production guidance for Australia and Africa remains unchanged compared with previously, while it has been reduced in both North and South America, which had three and two mines on care and maintenance, respectively, at the height of the coronavirus emergency. Elsewhere, there has been a small US$75m increase in the estimate of FY20 capex to US$1.375bn and a similarly small US$125m increase in the estimate of depreciation to US$2.25bn, partially offset by a US$50m decrease in advanced exploration and development spending to US$350m.
A game of two halves
To date, Newmont has generated adjusted earnings of US$0.729/share in H120, with an analysts’ consensus that it will earn a further US$1.41/share in H220 (source: Refinitiv, 30 July 2020) to take the total to US$2.139/share for the full year (within a range of US$1.70–2.72/share), supported by a gold price that, at US$1,945/oz, is almost 18% higher than the average realised price in H1.
Valuation
Despite being the world’s largest gold producer, NEM is good value relative to five large-cap peers on 56% of four measures (P/E, P/CF, EV/EBITDA and yield) over three years and the highest yielding for every year (cf 50% of measures in May).
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Consensus estimates
Source: Company sources, Refinitiv. Note: EPS is normalised, excluding exceptional items; *Adjusted EPS (company adjusted basis); **Excluding US$0.88/share special dividend. |
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Research: TMT
YouGov’s year-end update indicates that performance has been in line with expectations and it has yet to see any material impact from COVID-19. Our estimates are unchanged ahead of results on 6 October. Data Products remains the main driver, notably in its more established UK and US markets, as brands keep close track of their standing with customers. The group’s wide spread of sector verticals will have been helpful, with strong tech and e-commerce offsetting weaker retail performance. YouGov’s share price has recovered from the initial pandemic mark-down, with the rating now reflecting its premium growth and strong market positioning.