Sibanye Gold Ltd. :SBGL-US: Earnings Analysis: For the six months ended December 31, 2016 : April 4, 2017

Sibanye Gold Ltd. reports financial results for the half-year ended December 31, 2016.

Highlights

  • Summary numbers: Revenues of USD 1,188.94 million, Net Earnings of USD 242.20 million.
  • Gross margins widened from 15.49% to 18.37% compared to the same period last year, operating (EBITDA) margins now 30.34% from 30.72%.
  • Change in operating cash flow of 55.31% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-06-30 2015-12-31 2015-06-30 2014-12-31
Relevant Numbers (Semi-Annual)
Revenues 1188.94 971.98 900.6 858.16 1082.37
Revenue Growth (YOY) 32.02 13.26 -16.79 -6.64 8.5
Earnings 242.2 22.01 38.78 15.06 92.26
Earnings Growth (YOY) 524.49 46.16 -57.96 -69.77 -33.29
Net Margin 20.37 2.26 4.31 1.75 8.52
EPS 1.05 0.1 0.17 0.07 0.41
Return on Equity 44.02 4.52 7.16 2.41 13.96
Return on Assets 18.31 2.17 3.75 1.27 7.49

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, SBGL-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if SBGL-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 22.32% and earnings by 1,000.35% compared to the previous period.

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 15.49% to 18.37%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

SBGL-US‘s year-on-year change in operating cash flow of 55.31% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 14.46% to 17.66% and (2) one-time items. The company’s pretax margins are now 23.12% compared to 6.00% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

Sibanye Gold Ltd. operates as a gold mining company, which is primarily involved in underground and surface gold mining and related activities, including, extraction, processing and smelting. It holds interest in the Kloof Driefontein Complex located in the Gauteng Province, the Beatrix Gold Mine located in the Magisterial District of Westonaria, Cooke Operations in the West Wits Basin and Driefontein Operations situated near the town of Carletonville in the Gauteng province. Sibanye Gold was founded on December 12, 2002 and is headquartered in Westonaria, South Africa.

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