Toronto (Reuters) - Canada’s Kinross Gold Corp K.TO reported a 7 percent drop in adjusted third-quarter profit on Wednesday, as higher costs outweighed stronger production, but the gold miner still beat analyst expectations.
Kinross said it expects to meet the higher end of its production targets for the year and lowered its 2012 capital spending budget to $2 billion, a cut of $200 million, as part of a cost-reduction plan announced earlier this year.
“As we go through our budgeting process for 2013, and looking beyond, we are seeking every available opportunity to control costs, with a focus on margins and free cash flow across our operations,” said chief executive J. Paul Rollinson in a statement.
Rollinson took over the top job in August, replacing ousted CEO Tye Burt, who spearheaded Kinross’ massive $7.1 billion takeover of Red Back Mining in 2010. The deal has failed to live up to expectations so far.
Kinross booked a $2.94 billion non-cash goodwill impairment charge earlier this year related to the Tasiast gold mine in Mauritania and the Chirano gold mine in Ghana - both of which were acquired from Red Back.
The company said a prefeasibility study on a revised expansion plan at Tasiast remains on track to be completed in the first quarter of 2013.
Earnings were $224.9 million, or 20 cents a share, for the quarter ended Sept 30. That compared with $207.1 million, or 18 cents a share, in the year-earlier period.
Excluding one-time items, earnings were $250.4 million, or 22 cents a share, compared with $269.4 million, or 24 cents a share in the year-before period.
Analysts, on average, had expected earnings of 19 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $1.1 billion as gold production climbed 6 percent to 672,173 ounces on better output at the Fort Know mine in Alaska and the Kupol mine in Russia.
The realized gold price in the third quarter rose slightly to $1,649 per ounce, up from $1,644 per ounce in the year-ago period, while cost of sales were $677 per ounce, up from $626 per ounce in the third quarter of 2011.
Kinross said it is on track to hit the higher end of its full year production target of some 2.5 million to 2.6 million gold equivalent ounces, with costs also expected to be at the higher end of its forecast $690-$725 per ounce.
Reporting by Julie Gordon; Editing by Peter Galloway and David Gregorio