Harmony FY HEPS down 49%
Harmony reported a 49 per cent plunge in first-half headline earnings as costs climbed and production declined. Harmony CEO, Peter Steenkamp joins CNBC Africa for more.
Tue, 30 Aug 2022 11:39:35 GMT
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AI Generated Summary
- Harmony Gold Mining reported a 49 per cent decline in first-half headline earnings due to rising costs and production challenges.
- The company is focused on strategic decisions to optimize operations, including closing unviable mines and investing in higher-margin assets.
- Harmony's renewable energy program, cost management strategies, and focus on quality acquisitions are key pillars of its growth strategy.
Harmony Gold Mining Company Limited recently reported a 49 per cent decline in first-half headline earnings, a result of escalating costs and decreased production. CEO Peter Steenkamp sat down with CNBC Africa to discuss the company's performance and outlook for the future amidst a challenging operating environment.
Steenkamp acknowledged the various pain points the company faced, including higher costs, reduced production, safety-related stoppages, mining constraints, and supply chain disruptions. Despite these challenges, Steenkamp remained optimistic about Harmony's performance, noting that the company had met its production guidance and was close to meeting its cost targets for the period.
Looking ahead, Steenkamp highlighted the company's strategic decisions to close certain mines at the end of their life and redirect capital to higher-margin operations. These tough choices, he believes, will position Harmony in a better space moving forward.
One significant initiative is Harmony's renewable energy program, aimed at reducing costs and improving sustainability. The company has completed a 30-megawatt plant and plans to build a 37-megawatt plant by 2025. While the company remains dependent on national power provider Eskom, the move towards renewable energy is expected to drive long-term cost savings.
Steenkamp also discussed the impact of inflation on operating costs, particularly in labor and electricity expenses. Harmony signed a three-year labor agreement last year, providing cost certainty in the near term. Additionally, the company's focus on renewable energy and efficiency savings has resulted in approximately 1.4 billion rand in cost savings to date.
Addressing concerns about gold prices, Steenkamp noted the trade-off between the dollar and gold prices, driven by interest rate dynamics. Despite high inflation rates globally, gold prices have not seen a significant increase, impacting mining revenues. In the current environment, Steenkamp emphasized the importance of operational efficiency and cost management to navigate challenges.
When queried about new gold exploration projects, Steenkamp mentioned the Wafi-Golpu gold project in Papua New Guinea. Harmony is awaiting government approvals to advance the project and remains focused on acquiring assets that enhance the overall quality of its portfolio. While the company continues to explore potential opportunities, Steenkamp emphasized the importance of strategic acquisitions that align with Harmony's long-term growth objectives.
In conclusion, Steenkamp expressed confidence in Harmony's operational plans and the strategic initiatives undertaken to drive sustainable growth. While challenges persist in the mining sector, Steenkamp's outlook remains positive, underpinned by a commitment to operational excellence and prudent financial management.