Financial performance of johannesburg securities exchange traded gold mining companies: Du pont and economic value added analyses

Abstract

Analysis of financial performance of mining companies offers management the opportunity to scrutinize company performance against its strategic goals. Furthermore, it assists investors in investment decision-making. Gold mining plays an important role in the South African economy through taxation, foreign investment income, employment and skill development. Hence, the financial performance of gold mining companies for the past 10 years was analysed based on their gold assets only. The analysis was conducted by using the commonly applied tools for analysis of financial performance viz Economic Value Add (EVA) and Du Pont Analysis. Data were sourced from individual company annual reports. Based on these measures, Sibanye-Stillwater was the better performing gold mining company, while AngloGold Ashanti came second in all fields of measurement except for profit, which averaged the highest over the period under study. Harmony Gold was the worst performing company of all the three. Company performance fluctuates on year-on-year basis, hence the importance of conducting financial analysis for asset optimisation, return maximisation and investment opportunities. While mining companies report a number of performance measures in silos, it is important that comparison per sector is done for investment purposes. This is supported by the fact companies compete for scarce capital investment.