Polymetal International PLC on Wednesday reported a fall in annual earnings due to higher costs, as the miner deals with the effects of sanctions on Russia after it invaded Ukraine last week.
Chief Executive Vitaly Nesis said that the recent economic and political sanctions towards Russia will ‘are likely to require a lot of management efforts to maintain company performance’.
Polymetal is a miner of precious metals in Russia.
Net earnings in 2021 fell 16% to $904 million from $1.07 billion in 2020. The fall in earnings was due to higher costs which hit operating profit, the company noted.
Basic earnings per share fell 15% to $1.91 from $2.25, and missed the analyst consensus compiled by Financial Times, which had 2021 EPS at $2.03.
Revenue increased 0.7% to $2.89 billion from $2.87 billion. Revenue came above market consensus, which was $2.86 billion.
‘We are reporting strong net earnings for the year amidst a variety of macroeconomic and pandemic-related challenges. Excellent financial results were supported by robust operating performance,’ Polymetal said.
All-in sustaining cash costs were up 18% to $1,030 per ounce of gold equivalent from $874, worse than the upper end of its previously announced guidance range of $925 to $975 per ounce. The spot gold price was quoted at $1,942.45 an ounce on Wednesday.
Polymetal declared a final payout of $0.52 a share. This left the total annual payout at $0.97 a share, down 25% from $1.29 in 2020, and falling short of consensus of $1.175 a share.
Polymetal has seen its stock nosedive over the past week following Russia’s invasion of Ukraine, which has drawn blanketing sanctions for Moscow.
Polymetal shares are down 79% since the start of the year, with most loss of value happening over the past week. On Wednesday morning, the stock took back a little of its recent losses, gaining 5.1% to 272.00p each in London.
Victoria Scholar, the head of investment at interactive investor explained: ‘Polymetal is...bouncing back amid a period of wild swings in both directions for stocks tied to Russia since the conflict broke out, driven by a combination of panic selling and opportunistic buying.’
Liberum analysts noted that following the recent share price dive, the company is likely to be removed from FTSE 100 in the index’s quarterly review on Thursday.
Polymetal reiterated its current production guidance of 1.7 million ounces of gold equivalent in 2022, matching 2021’s output, with production weighted to the second half due to seasonality.
‘However, despite a wide range of uncertainties we will be working under in 2022, it is our current intention to operate as normally as possible,’ CEO Nesis said.
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