Anglo American profits double on high commodity prices

29th July 2011, Comments 0 comments

Global miner Anglo American said Friday that net profits almost doubled to US$4.0 billion dollars (2.8 billion euros) in the first half of the year, when it was boosted by higher commodity prices.

Earnings after taxation rocketed 93 percent in the six months to the end of June, compared with US$2.06 billion in the equivalent period of last year, the London-based company said in a results statement.

Chief Executive Cynthia Carroll said that the group was now reaping the benefits of operational changes and continued investment throughout the global economic downturn.

"Anglo American's strong financial performance in the first half is reflective of the operational and business improvement foundations put in place over the last three years which have enabled us to capture the maximum benefit of increased commodity prices," Carroll said in the earnings release.

"Furthermore, our commitment to sustain investment in our growth projects through the downturn is now paying dividends; that new production is already coming on stream and will drive very substantial incremental cash flows as the projects ramp up from this year onwards."

The firm, which has key mining operations in South Africa, added that operating profit leapt 45 percent to $6.0 billion in the reporting period, while revenues swelled 22 percent to $18.29 billion.

However, investors took the opportunity to take profits, despite the bumper profits announcement.

Shares slid 1.95 percent in morning deals on London's FTSE 100 index of leading companies, which in turn was 0.59 percent lower.

Anglo added that it had faced major weather problems during the first half of the year -- particularly in Australia, where the north was hit by record flooding while tropical cyclones hammered the vast continent's east and west coasts.

However, Carroll predicted that the group would continue to strengthen in the second half of 2011.

"As we have seen across many major mining regions, there were also a number of factors that negatively affected performance, including weather conditions in Australia and South Africa, further dollar weakness, input cost pressures and lower ore grades," added Carroll.

"However, I am pleased to report that where we are able to mitigate against these factors, we have done so and we expect a stronger second half to the year to build upon the momentum of the second quarter.

"Our post-flood production recovery plan for our metallurgical coal business in Australia and the firmly embedded practices of our global supply chain have shown particular success, to name just two examples."

© 2011 AFP

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