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Franco-Nevada Q1 profit down, revenues rise as production in line with expectations

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Franco-Nevada Corp (TSE:FNV) (NYSE:FNV) reported a drop in first quarter net income despite a rise in revenue as the gold-focused royalty and stream company struggled with higher operating expenses, but the results were still better than anticipated. 

For the three months that ended March 31, the Toronto-headquartered company reported net income of $35.4 million for earnings of $0.24 cents per diluted share compared to the first quarter of 2012, which reported $46.8 million, or $0.33 per diluted share.

Adjusted net income, defined by the company as net income excluding gains or losses from foreign exchange, as well as impairment charges, among other unusual items, came in at $40.6 million, or $0.28 per share, compared to the equivalent figures of $43.6 million, or $0.31 per share, for the first quarter of 2012.

Revenue for the quarter was recorded at US$108.8 million compared to US$105 million for the same quarter a year ago, an increase of 3.6 per cent attributed to higher revenue from gold, oil and other mineral assets. 

Earnings per share were a penny up on analysts’ expectations, which called for a profit of 27 cents, while revenue was also better than the expected $106 million figure. 

Gold equivalent ounces (GEOs) earned by the company from its royalty and stream mineral interests came to 58,289 in the quarter, up on the figure for the same quarter a year ago of 55,466 ounces, a bump of more than 5 per cent.

The company’s oil and gas assets generated $13.9 million in revenues during the quarter compared to the figure of $10.5 million for the year-ago equivalent.

Revenue broke down as coming mainly from precious metals (71 per cent from gold and 14 per cent from PGMs) while geographically, North America accounted for 78 per cent of revenue with 33 per cent coming from Canada, 24 per cent from the US, and 21 per cent from Mexico.

Operating expenses for the three months, however, were $55.5 million, up from $51.3 million last year.

The company’s attributable royalty and stream production for the the latest quarter was in-line with its own expectations. 

"Franco-Nevada's diversified portfolio and business model continue to deliver dependable top and bottom line results," said president and CEO David Harquail. "First quarter revenues exceed those of the same quarter last year and we were pleased to see the start of gold payments from the Detour Lake project.  

"Franco-Nevada has a very strong balance sheet and is well positioned in this opportunity-rich environment to add to its portfolio.  We have started 2013 with two new gold royalty acquisitions in North America, both of which have very good exploration upside potential.  We expect to add further assets over the year."

Shares in the company were trading down on the TSX after the release of the figures, hitting an intraday low of $43.07 per share from an open of $44.03.

 

Quick facts: Franco-Nevada Corporation

Price: 169.65 CAD

TSX:FNV
Market: TSX
Market Cap: $32.37 billion
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