OTTAWA (Reuters) - Fourth-quarter profit at Goldcorp Inc (G.TO) (GG.N) nearly quadrupled, Canada's No. 2 gold producer said on Thursday, as higher gold prices and increased production more than offset rising costs.
The company said earnings rose to $256.5 million, or 36 cents a share, from $66 million, or 11 cents a share, in the same period a year earlier.
Adjusted earnings rose to $178.5 million, or 25 cents a share, from $113.5 million, or 19 cents a share. That beat the mean expectation of analysts for a profit of 17 cents a share, according to Reuters Estimates.
Goldcorp also reaffirmed its 2008 production target of about 2.6 million ounces of gold, at total cash costs of about $250 an ounce.
The company, which is unhedged, said that quarterly gold production rose 9 percent to 638,900 ounces.
Gold sales increased to 638,500 ounces at a cash cost of $195 an ounce, compared with sales of 599,500 ounces at a cost of $160 an ounce in the same period last year.
Rising fuel prices and a stronger Canadian dollar are contributing to higher costs for miners along with the increasing scarcity of skilled workers and mining equipment.
The company sold gold at an average price of $797 per ounce in the quarter, up almost 30 percent from $619 in the same period a year ago.
"Simply put, our realized gold price ... increased $178 per ounce while our cash costs only increased by $35 per ounce," Chief Financial Officer Lindsay Hall said on a conference call. "Goldcorp is continuing to capture increasing margins as the gold prices are rising."
Operating cash flow rose 106 percent to $327.1 million and revenue grew 42 percent to $679.8 million from $477.8 million.
Chief Executive Kevin MacArthur said Goldcorp is well positioned for profitable growth as it emerges from a year of transition.
"I'm also pleased with the way our mines hit their targets in the fourth quarter and how they succeeded in containing costs," he said on a conference call.
"Our new mines are designed to grow production and to lower our average cash costs, thus increasing the company's margins as the gold production comes on line."
Mine construction at the Penasquito project in Mexico remains on schedule, the company said, with 37 percent of the work completed by year-end.
In December, Goldcorp decided to boost mill throughput at Penasquito by 30 percent after a 48 percent increase in reserve estimates. The expanded operation is now seen producing an average 1.7 million gold equivalent ounces a year. Production is seen starting late in 2008 with milling to begin in 2009.
A big expansion project at Red Lake, which produced 184,300 ounces of gold in the fourth quarter, is seen boosting output to 740,000 gold ounces in 2008 and eventually 1 million gold ounces per year. Work at the Ontario mine is in the final stages, the company said.
Goldcorp closed a deal February 14 to sell its 48 percent stake in Silver Wheaton SLW.TO for about C$1.6 billion.
The cash strengthens its balance sheet and provides the financial flexibility to build new mines. Goldcorp expects to boost gold production by 50 percent over the next five years.
Shares in the Vancouver, British Columbia-based miner were up about 2 percent on Thursday, at C$40.35 on the Toronto Stock Exchange and $39.90 in New York. The stock has gained about 23 percent in the last 12 months.
Reporting by Susan Taylor; Editing by Rob Wilson