Harmony Gold Mining Shares Tumble on Cautious Guidance, Disappointing Dividend

Shares in Harmony Gold Mining slumped 7% on Thursday after the South African miner declared a lower-than-expected dividend payout and provided a conservative guidance for the current fiscal year.

The drop comes despite the miner reporting higher net profit and revenue for the previous fiscal year thanks to surging gold prices and an increase in ore grades recovered.

For the current fiscal year ending June 30, Harmony Gold is expecting to produce between 1.4 million and 1.5 million ounces of gold, a slight decline from the 1.56 million ounces it dug out in fiscal 2024.

It also expects mining costs to increase, guiding for all-in sustaining costs--a metric that reflects the full costs of gold mining--to be between 1.02 million and 1.10 million rand for each kilogram of gold.

"We remain conservative in our planning assumptions," Chief Executive Peter Steenkamp said, adding that much of the performance in fiscal 2024 was due to an overachievement at some of the company's operations as a result of higher-than-expected ore grades recovered.

Harmony declared a final dividend of 94 South African cents a share, up from 75 cents the prior year but significantly lower than the 176 cents forecast by a consensus of analysts surveyed by Visible Alpha.

The lower-than-expected payout is partly due to an increase in capital-expenditure guidance for the current fiscal year to $592 million from $445 million, according to Rene Hochreiter, analyst at South African research firm Noah Capital Markets.

Fiscal 2024 net profit rose 67% to $459 million, while revenue increased 18% to $3.28 billion on higher ore grades recovered and a 11% rise in average gold prices received, Harmony said.

Prices for the yellow metal have been historically high this calendar year, providing significant boons to miners. A year ago, prices were around $1,950 a troy ounce on the New York Mercantile Exchange, which has grown steadily to around $2,550 now.

Headline earnings per share--a closely-watched metric for South African miners--jumped to 99 cents from 45 cents.