Mining giant Xstrata first half profits up 27%

2nd August 2011, Comments 0 comments

Anglo-Swiss mining giant Xstrata said Tuesday its first half net profit jumped 27 percent to $2.9 billion (2.0 billion euros) and that it expected even better earnings for the second half.

"A substantially stronger financial performance in the first half reflected growing demand for our products from emerging Asian economies and recovering Western markets," Xstrata chief executive officer Mick Davis said in a statement.

He added that the group was now "operating with good momentum to deliver a substantially stronger second half."

The company said sales rose 23 percent from a year earlier to $16.8 billion during the first half.

It proposed an interim dividend of 13 cents per share, up 160 percent.

Xstrata said that despite inflationary pressures and the low value of the US dollar, it had managed to save $52 million in costs in the first half.

"Growing demand and tighter availability are leading to increasing electricity and fuel prices, higher costs for key consumables including raw materials, fuel and steel and steep year-on-year increases in labour rates," Davis said.

"Compounding the challenge, the persistently weaker US dollar against the majority of producer currencies -- in particular the Australian dollar -- has exacerbated the impact on US dollar-denominated costs.

"Set against the inexorable creep of rising costs at ageing operations ... this cost performance is all the more impressive," Davis added, saying the company was maintaining its 50 percent growth target for end-2014.

© 2011 AFP

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