Newcrest cuts production targets on Lihir

NEWCREST investors have been dealt another blow after the gold miner cut its production targets by 10 per cent due to ongoing problems at its Lihir operations.

But analysts say the eight per cent share price fall on the back of the announcement could be overdone due to the company's solid fundamentals.

Shares in Newcrest were down by $1.82, or 8.32 per cent, to $20.05 on Thursday.

While Newcrest's assets in Australia and Indonesia are performing soundly, the Lihir operation in Papua New Guinea has been plagued by maintenance problems as company continues to fix parts of the plant.

"Primarily as a result of the restricted production capacity at Lihir, the company has determined that the original guidance provided for financial year 2012/13 gold production is no longer achievable," Newcrest said in a statement.

Newcrest, which also announced a series of executive changes on Thursday, reduced its gold production guidance to between 2 million and 2.15 million ounces for the 2013 financial year, around 10 per cent below the original minimum guidance level.

The company has decided to completely repair its autoclave at Lihir, which will take between five to seven weeks to complete.

Morningstar Resource analyst Mathew Hodge said the future would look brighter for Newcrest if it could overcome problems at Lihir by next year and make the $9 billion takeover for Lihir Gold pay its way.

"Ultimately what matters for Newcrest is that they ramp up Lihir and ramp up Cadia and get solid, consistent low-cost production," Mr Hodge said.

"If they do that they'll restore their position as a low-cost producer."

The next year would be a big test of Newcrest's management.

He said investors might think differently about the stock in a 2014.

"People are implying that things are going to continue to be bad, but I think it's a bit overdone."

Operations at Cadia Valley in NSW and Bonikro in the Ivory Coast are expected to deliver within their original guidance ranges, while Hidden Valley production in PNG is in the range of 80,000 to 90,000 ounces.

The Telfer operation in Western Australia was affected by the heavy rainfall in February associated with Cyclone Rusty but is still expected to reach its original guidance.

Annual copper production guidance remains unchanged.

Newcrest also announced the appointment of Geoff Day as executive general manager (EGM) of sustainability and external affairs to succeed Stephen Creese, who is retiring from his current role as EGM of corporate affairs on July 1.

Last month Newcrest reported that first half profit dropped by 51 per cent due to weaker production and sales.

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QBE on track to meet 2013 targets

QBE's chairman says the global insurer is on track to meet its financial targets this year. Source: AAP

GLOBAL insurer QBE is on track to meet its financial targets this year as it embarks on a major transformation plan.

Chairman Belinda Hutchinson told shareholders at QBE's annual general meeting that while the insurer was disappointed with its 2012 result, things were looking brighter this year.

"We are at a stage in the global economic and insurance market cycle where there are encouraging signs of increasing premium rates, indications of positive economic growth in most of our key markets and improving investment markets, particularly longer term bond yields," she said.

"Results to date are on track to meet our targets for 2013 as advised to the market with the annual results in February."

QBE in February reported a full year net profit of $US761 million and flagged major changes to its business to help save $US250 million in annual costs.

It expects to achieve a combined operating ratio of 92 per cent this year and an insurance profit margin of around 11 per cent.

But media reports have suggested that QBE could cut hundreds of jobs as part of its planned cost savings.

The insurer has yet to confirm how many jobs could be affected.

A small group of protesters gathered outside the QBE's shareholder meeting in Sydney on Wednesday, worried that the insurer may relocate 700 jobs from NSW to the Philippines.

The Finance Sector Union spokeswoman Leanne Shingles said QBE needed to stand by Australian jobs.

"QBE makes a lot of money from the Australian community," she told AAP.

"They market themselves as an Australian company. They support a lot of Australian sporting teams.

"Our message to them is if you really want to be an Australian company you have a responsibility to growing jobs and skills in Australia."

Chief executive John Neal did not discuss job losses in his speech to the meeting, but said QBE was reviewing all its businesses and insurance portfolios.

He said benefits from the cost saving program would begin to emerge at the end of 2013, with net gains expected the following year.

He also expects only modest growth in gross and net written premiums in 2013, with no major acquisitions planned.

Meanwhile, Ms Hutchinson said QBE would carry out a major review of its executive pay arrangements following shareholder concerns about performance hurdles.

QBE shares were 21 cents higher at $13.15 at 1111 AEDT.

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