Resources group Xstrata reported on Tuesday that it had generated a 544% rise in earnings per share to $1,61 for the year ended December 2010 from $0,25 a year ago.
Revenue grew 34% to $30,5-billion, while operating profit was up 77% to $7,6-billion as restructuring activities undertaken during 2009 positioned Xstrata to benefit from a more favourable operating environment.
A final dividend of $0.20 cents per share was proposed for payment in May, reflecting a return to pre-financial crisis levels and confidence in the medium-term outlook.
The group reported a strong operational performance for the period, with record annual production volumes for coking coal, semi-soft coking coal and mined and refined nickel.
During the year, three major new mines were successfully commissioned — Nickel Rim South, Goedgevonden and Blakefield South. In addition, 20 major expansions and new mines are being constructed, including 10 projects approved during 2010.
Xstrata CE Mick Davis said a strong operational performance in 2010 contributed to an exciting year for Xstrata.
“We made substantial progress in bringing a number of our organic growth projects into production and advanced the development of both late and early stage opportunities in our pipeline.
“The opportunities seized during the difficult market conditions of 2009 to restructure higher cost businesses, improve productivity and strengthen the balance sheet, together with ongoing initiatives to improve the quality and value of our underlying business, positioned Xstrata to benefit from amore favourable operating environment in 2010.
“Year-on-year cost savings have become a hallmark of our operational performance and a key indicator of the steady improvement in the competitiveness and value of our operations. Consistent annual cost savings at each reporting period since our IPO nine years ago have transformed the cost competitiveness of our commodity businesses, each of which is now positioned in the lower half of its respective industry cost curve.”
Fundamental transformation
Davis added that Xstrata was now in the middle of a fundamental transformation of its portfolio through the development of its organic growth pipeline. The scale and number of projects being developed by its teams represent a step change in the group’s growth strategy and will transform Xstrata’s volumes and unit costs profoundly.
“Our growth plans will see us progressively deliver substantial additional volumes of key commodities into fundamentally constrained commodity markets.”
Looking ahead, Davis said leading indicators suggested that the United States economy continued to find a reasonably solid track for recovery.
In the euro zone, January data for the manufacturing and services industries revealed the fastest pace of expansion in nine months.
“Developing economies and China in particular appear set to continue to achieve wholly respectable high single-digit growth rates in 2011, albeit below 2010 levels due to the impacts of inflation and the proactive actions by governments to contain economic growth to within manageable levels.
“The next stage of our transformation is now well underway, to exploit the various options embedded within our portfolio to create value through organic growth,” he concluded. — I-Net Bridge.