Swiss-based miner Xstrata beat forecasts with a 119% rise in 2006 adjusted net profit, boosted by strong copper and nickel prices, and said on Tuesday the industry outlook remained positive.
The London-listed firm, 36% owned by commodities giant Glencore, said it made a net profit of $4,89-billion, accounting for three recent acquisitions as if they had been part of the group since the start of the year.
Analysts had forecast an adjusted profit of $4,6-billion, according to the average of a company poll.
Xstrata made three big acquisitions in 2006 — one third of Colombia’s Cerrejon coal operation, Peru’s Tintaya copper mine and, biggest of all, Canadian miner Falconbridge.
The fast-growing group has been benefiting from a boom in demand for metals, with copper prices surging around 40% in 2006 and nickel soaring around 250%, and continuing to climb at the start of this year.
But its shares have underperformed the DJ Stoxx basic resources index by about 10% this year, as prices for some of its metals, such as copper, have slipped back.
”While it is unlikely that average prices for base metals will continue to rise at a similar rate in 2007, the fundamental outlook for the industry remains positive,” Xstrata said in a statement.
”The rapidly industrialising economies of China and India and the satisfactorily performing economies of the older ”Asian tigers” and Europe will continue to drive demand growth for metals and energy, despite an underperforming US economy.”
Xstrata said it had confirmed annual synergies of $545-million from its purchase of Falconbridge, topping analysts’ forecasts of $300-million to $400-million.
It also announced resource upgrades for its Las Bambas and Tintaya copper deposits in Peru and an expansion in concentrator capacity at its McArthur River open-pit zinc-lead mine in Australia.
Xstrata proposed a final dividend of 30 cents a share, up 34% on the year before.
Its shares closed at 2 230 pence on Monday, valuing the business at about £22-billion. – Reuters