For investors inured to football cliché, Ian Harebottle's view that Gemfields (GEM) is set for "a year of two halves" at first reads like a warning of lumpy gemstone auction revenue and imprecise forecasts. But the miner's chief executive in fact expects greater equivalence between those two halves, unlike the previous financial year, in which 80 per cent of the gross profit was booked in the six months to December 2014.
That's reassuring, because underlying earnings fell 63 per cent this time around to $35.6m (£25.1m). The decline should be offset by two emerald auctions scheduled before July, including one in March for "predominantly higher quality" stones, and another sale of mixed rubies and corundum.
Outside of the auction houses, Gemfields upped production to 15.7m carats of emerald and beryl at significantly higher grades. Unit operating costs and cash rock handling costs both fell, the former in part thanks to the completion of the fourth highwall push back at Kagem, still the largest emerald mine in the world. Also encouragingly, sales at the wholly-owned Fabergé brand leapt 70 per cent, while losses before underlying earnings narrowed by a fifth.
Analysts at finnCap expect adjusted 2.1¢ EPS and pre-tax profit of $30.2m for the year to June, up from 0.7¢ and $26.3m last financial year.
GEMFIELDS (GEM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 47p | MARKET VALUE: | £256m | |
| TOUCH: | 47-47.5p | 12-MONTH HIGH: | 69p | LOW: 35p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 46.1¢ | NET DEBT: | 9.8% | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 103 | 43.5 | 3.0 | nil |
| 2015 | 94.0 | 21.8 | 1.0 | nil |
| % change | -9 | -50 | -67 | - |
Ex-div:na Payment:na £1=$1.42 | ||||
