Global resources group Anglo American on Thursday reported record interim headline earnings of $1,304-billion, up 52% from $856-million in the previous comparative period.
Five analysts surveyed by I-Net Bridge had expected Anglo’s headline earnings to come in at $1,236-billion. Analysts’ forecasts ranged from $1,186-billion to $1,278-billion.
Anglo reported a 49% increase in its interim headline earnings per share to 91 US cents from 61 US cents before. The group also increased its interim dividend per share by 27% to 19 US cents from 15 US cents previously.
Analysts surveyed by I-Net Bridge had expected interim headline earnings per share of 87,6 US cents and an interim dividend per share of 19,40 US cents.
During the half-year, Anglo’s base metal division had a record performance with its headline earnings increasing sevenfold to $455-million.
The group’s ferrous metals, coal and platinum interests benefited from higher prices and demand for rough diamonds remained firm.
On the other hand, there were steady performances from Anglo’s industrial minerals as well as paper and packaging divisions.
However, a strong rand negatively affected the group’s South African earnings. During the half-year, cost and efficiency improvements resulted in total cost savings of $248-million, very close to the group’s 2004 financial year target of $250-million.
During the half-year Anglo completed non-core disposals of $1,3-billion, including its 20% stake in Gold Fields to Russia’s Norilsk Nickel for $1,18-billion.
Anglo also disposed of its remaining stake in FirstRand (FSR) for $47-million and also agreed, subject to certain conditions, to sell its 18% stake in Western Areas to a black empowerment consortium.
Looking ahead, Anglo said global economic conditions remained positive for commodities.
“The gross domestic production growth trends for both the US and Japan and the ongoing industrialisation of China, while perhaps not at the recent remarkable rate of growth, as well as Russia and India, are likely to increase demand for the group’s key commodities.
European economic growth, however, remains of concern, with likely adverse impact on our paper and packaging operations as well as some of our industrial minerals assets,” Anglo said in a statement.
However, the strong level of the South African rand over the past two months will — if maintained — adversely affect the performance of Anglo’s South African assets in the absence of any material commodity price increases.
“Overall, however, our balanced geographic and asset base contributes a unique mix which, with the ongoing focus on cost efficiencies, strong cash generation and a $6-billion project pipeline, should continue to underpin our performance in the years ahead,” Anglo said.
During the interim period, the first quarter saw a number of metal prices reaching record or near-record highs as China’s growing need for commodities impacted international markets.
The economic turnaround in the US and Japan added to this positive momentum, which resulted in record levels of speculative activity in a number of metals.
The second quarter on the other hand was dominated by fears of rising US interest rates and a potential downturn in the Chinese economy as their government announced the introduction of measures designed to reduce inflationary pressures.
Anglo’s turnover including share of joint ventures and associates increased by 26% in the half year to $15,235-billion up from $12,076-billion previously.
Total operating profit for the period rocketed 47% to $2,248-billion, up from $1,534-billion.
Net cash inflow from operating activities rose 61% to $2,075-billion from $1,286-billion before.
Capital expenditure during the half year increased by 19% to $1,397-billion from $1,172-billion.
“Base metals and ferrous metals reported record results due to higher metals prices and production volumes and also the impact of recent acquisitions, in particular Minera Sur Andes and Kumba,” Anglo CE Tony Trahar said.
The group’s expansions in South America resulted in over 40% of headline earnings coming from the Americas. South Africa accounted for 29% of headline earnings with Europe contributing 15%.
Significant developments were made in our $6-billion project pipeline, one of the largest organic growth programmes in the resources industry.
Construction of the $654-million Collahuasi Rosario Project in Chile was completed some five weeks ahead of schedule and under budget and the project is coming on stream in a favourable copper price environment.
In the UK, Anglo Industrial Minerals’ new cement plant at Buxton commenced operation in March and is ramping up to full capacity.
The Skorpion zinc mine in Namibia continued to ramp up production and is on target to achieve full production in December 2004. – I-Net Bridge