What happened
Shares of precious metals producer Newmont Goldcorp (NEM -0.03%) fell dramatically on Monday, dropping by nearly 15% at roughly 2:30 p.m. ET. The big news was the company's second-quarter 2022 earnings update, which hit the market today. Investors were not pleased with what the company had to say.
So what
There was some good news in the second-quarter numbers. For example, gold equivalent production was higher by 3% year over year. The company was also able to sell its products for slightly higher prices, achieving a per-ounce gold sales price of $1,836 in the second quarter of 2022 versus $1,823 in the same quarter last year.
That said, there was a sequential decline in the realized price from the first quarter, but, to be fair, there's not much the company can do about commodity prices. At the end of the day, the top line was roughly in line with Wall Street expectations.
The bad news really shows up lower down in the earnings statement. Adjusted net income per share was $0.46 in the second quarter, down from $0.83 in the prior year and well below the $0.60 analysts had been projecting. Investors don't like it when companies miss consensus by such a wide margin.
A notable negative for Newmont was inflation-related increases in operating costs, which pushed all-in sustaining costs (the amount that is required to produce an ounce of gold and maintain production levels) up 16% year over year. Not a good trend, given that the price of gold fell sequentially between the first and second quarters. No wonder investors were worried.
Now what
Newmont didn't exactly have a bad quarter, but it is clear that inflation is turning into a material headwind for the business. Inflation is a major bugaboo for investors today and, combined with the earnings miss, it is hardly surprising that the stock sold off sharply.
