Harmony’s earnings surge but share price tanks on dividend disappointment, CEO to retire 

Harmony Gold’s headline earnings more than doubled for the financial year which ended 30 June as it timeously lifted production and grades to catch the windfall of record prices. 

Headline earnings per share surged 132% to 1,852 SA cents and operating free cash flow reached a record of R12.743 billion, up 111% from the previous year. 

The average gold price the company received for the year rose 16% to R1,201,653 per kg, while total gold production increased 6% to over 1.5 million ounces, boosted by significantly better grades. 

But investors can be a fussy bunch and Harmony’s share price took a nosedive of up to 10% at one point on Thursday as it opted to stick to a dividend of 20% of net free cash flow generated in the face of a bulging pipeline of projects that require significant capital. 

“In line with our capital allocation framework and dividend policy, and following on the payment of an interim dividend in April 2024, we have declared a final dividend of 94 SA cents (5 US cents) per share. This is on the back of the operating free cash generated throughout the financial year,” Harmony said. 

The company plans capital expenditure of over R10.8-billion in the 2025 financial year compared to around R8.3-billion in the previous one. In 2026, that is seen tapering off to R10.3-billion and then to around R9.4-billion. 

“There is one lot of investors who have been buying gold and gold shares as a safe haven. Now that the gold price is at record highs they want a fat dividend and yield out of it. But longer-term investors in gold equities will be happy with Harmony’s plans,” Bruce Williamson, a mining analyst at Integral Asset Management, told Daily Maverick.

CEO Peter Steenkamp, who is retiring at the end of this year after eight years at the helm, said its capital spending was directed at the company’s top-tier assets, holding the promise for better earnings and dividends down the road. 

“If you look at where we are doing this work it is all the higher margin and higher grade assets,” Steenkamp told Daily Maverick. 

This includes the expansion into high-grade ore bodies at Mponeng, the world’s deepest mine where gold is extracted from almost 4km beneath the surface. The life of Mponeng is being extended by 20 years.  

Harmony is also expected to commence development of its Eva copper project in Australia from 2026 once a feasibility study is completed and this will add to its existing capex plans. Copper now accounts for 21% of the company’s declared mineral resources. 

Copper is a coveted metal at the moment, not least because of its applications in the green energy transition, and Harmony is not the only gold producer diversifying in that direction. 

As Harmony forges ahead with its plans, it will do so under a new CEO, given the affable Steenkamp’s decision to retire after 45 years in the industry. 

His replacement has not yet been named but with the gold price still near record highs, it’s not a bad time to be a CEO of a producer of the precious metal – and one that is also expanding into copper. DM