DRDGold Ltd (DRD) Full Year 2024 Earnings Call Highlights: Revenue and Profit Surge Amid ...

GuruFocus News
4 min read

In This Article:

  • Revenue: Up 14% to just over ZAR6 billion.

  • Operating Profit: Increased by 14% to just over ZAR2 billion.

  • Headline Earnings: Up 4%.

  • Final Dividend: ZAR0.20 per share.

  • Gold Production: Just over 5 tonnes, a 5% year-on-year increase.

  • Sustaining Margin: 24%.

  • Cash Operating Cost: ZAR833,000 per kilogram, higher than guidance.

  • Free Cash Flow: Negative ZAR1.2 billion due to capital expenditure.

  • Capital Expenditure: ZAR3 billion, primarily for solar projects.

  • Operating Margin: 33.4% for the year.

  • All-in Sustaining Cost Margin: 24%.

  • Cash and Cash Equivalents: ZAR521 million as of June 30.

  • Facility Secured: ZAR2 billion facility with Nedbank for capital expansion.

Release Date: August 21, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • DRDGold Ltd (NYSE:DRD) reported a 14% increase in revenue, reaching over ZAR6 billion, driven by a favorable gold price.

  • The company maintained its dividend record, marking the 17th consecutive year of dividend payments, despite a smaller final dividend of ZAR0.20.

  • DRDGold Ltd (NYSE:DRD) invested in a 60-megawatt solar plant and battery storage, which is expected to significantly reduce electricity costs and improve sustainability.

  • The company achieved a 58% decrease in water consumption, with 95% of water used in mining being recycled, showcasing strong sustainable development efforts.

  • DRDGold Ltd (NYSE:DRD) is focusing on extending the life of its operations, with plans to increase gold production to 6 tonnes per year by 2028 through strategic investments and resource optimization.

Negative Points

  • The final dividend was reduced due to significant capital expenditure, which may continue to impact dividend payouts in the near future.

  • DRDGold Ltd (NYSE:DRD) faced challenges in achieving its targeted volume throughput, reaching only 84% of the goal, which affected overall production efficiency.

  • Cash operating costs increased, coming in higher than guidance at ZAR833,000 per kilogram, due to lower volume throughput and other operational challenges.

  • The company experienced a fatal incident, marking the first fatality in six years, highlighting ongoing safety concerns.

  • DRDGold Ltd (NYSE:DRD) is undertaking a high capital expenditure program, which may prioritize capital investments over dividend payouts, potentially affecting shareholder returns.

Q & A Highlights

Q: Can you talk about the implications for your dividend payouts over the next three years of this high capital expenditure program? A: If we don't make money, then there won't be a dividend. If we do continue to have free cash other than the growth capital, then we'll continue to pay a dividend. But we've got to be responsible in how we manage our cash flows. We are putting facilities in place for project funding, but we don't want to borrow money to pay a dividend. So, yes, capital will take priority over dividends.

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