Newcrest is out with a trading update that will not improve the mood of the market today. From Morgan Stanley:
- FY14 production guidance is 2.0-2.3Moz (MSe 2.33Moz) – New range is below prior the 5-10% production growth comment even after allowing for it to rebased to the FY13 level of 2.0-2.15Moz. (2.0 + 5% = 2.1Moz and 2.15Moz + 10% = 2.37Moz), it is now 4% growth at the mid-point.
- Write-downs of $5-6bn coming, was very unexpected given recent interaction with the company, particularly the write-down of $3.6bn goodwill on Lihir. The company estimate of gearing to rise ~30% post the write-down.
It also cut 2014 capex from $1.5 billion to about $1 billion and exploration expenditure would be cut from $160 million to $85 million. Shares fell as much as 14%, though have rebounded to -6% now.
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