AAP
Newcrest Mining Ltd has posted a 14.4 per cent increase in first half net profit and says it is in a strong position for earnings growth.
The gold miner reported net profit of $176.2 million for the six months to December 31, 2009, up from $154 million in the prior corresponding period.
Sales revenue fell 8.2 per cent to $1.1875 billion, from $1.2942 billion, the company said on Friday.
Managing director and chief executive Ian Smith said it was a "strong financial result".
"Newcrest is in a strong position with low gearing, a number of growth projects nearing completion," the company said in a statement.
"The Cadia East project (is) on track for Board approval in early April 2010 and (Newcrest has) an exciting portfolio of exploration opportunities capable of delivering the next phase of organic production and earnings growth," Mr Smith said in a statement.
Newcrest said profit margins increased during the first half of 2009/10, reflecting higher realised gold prices and a lower cost of sales.
Gold production fell six per cent by volume in the half, while copper production rose six per cent.
Newcrest said sales of both copper and gold were lower "with an associated build in inventory".
"Increased inventory levels at period end will flow through to profit in the second half of the year," the miner said.
Several projects were expected to reach full production in the second half of 2009/10.
"Growth projects at Ridgeway Deeps, Gosowong and Hidden Valley are nearing completion and are expected to reach full production in the next six months," Newcrest said.
"Ridgeway Deeps is expected to be completed $A40 million under budget at a total cost of $A505 million."
The company declared an unfranked interim dividend of five cents per share, after declaring no dividend for the prior corresponding period.
Mr Smith said half-year production had been in line with guidance.
He said access to higher gold grade zones had been established at Cadia Hill and Gosowong.
"Increased inventory levels at period end will flow through to profit in the second half of the year," Mr Smith said.
"A lower cost profile achieved during the period underpinned increased profit margins as cost reduction initiatives continue to deliver benefits."
Underlying profit rose 10 per cent to $266.6 million, from $241.6 million in the prior corresponding period.
"The increase was primarily driven by higher profit margins achieved from lower sales revenue," Newcrest said.
"Lower mine production costs and deferred mining charges improved profitability, whilst lower sales revenue was the result of lower gold and copper sales volumes and lower copper prices, partially offset by higher gold prices.
"The lower sales and increased inventories is a timing event which lowered profit and cashflow for the current half year."
