South Africa’s Harmony Gold said on Friday its full-year earnings would be lower than 2017 due to impairments against a number of its mines, as well as foreign exchange losses.
The gold producer said it expected Headline Earnings Per Share (HEPS) – the main profit measure in South Africa that strips out certain one-off items – to fall to between 164 and 179 cents in the year ended June 30, 2018, from 298 cents a year earlier.
The company is due to report full-year results on Tuesday.
Harmony said it made impairments of 5.3 billion rand ($386 million) against the following mines – Tshepong, Target 1, Joel, Kusasalethu, Unisel, Masimong, Doornkop and the undeveloped Target North – due to spiraling costs and a subdued gold price.
Investopedia describes an impairment as a permanent reduction in the value of a company’s (normally fixed) asset.
Its full-year results would also be hit by an exchange rate loss of about 669 million rand on its U.S. dollar-denominated debt, compared to an exchange rate gain of 215 million rand in the previous comparable period.
Harmony Gold and other South African gold producers are engaged in annual wage negotiations with unions.
Unions rejected an initial offer from the companies and are now discussing a revised offer.
Harmony Gold’s shares were down 2.5% at 21.77 rand at 1122 GMT.
