Anglo H1 as expected, coal and copper disappoint

LONDON – Anglo American Plc, the world’s third-largest miner, reported an expected 43 per cent jump in first-half profit last week, led by Asian demand, but earnings at its key base metals and coal divisions disappointed analysts.

London-listed Anglo is reaping the benefits from strong prices of platinum, gold, diamonds, coal and base and ferrous metals on the back of what it described as robust growth in China and the United States. “If Chinese demand continues at current levels and prospects for OECD growth improve in the second six months, the group’s earnings should remain strong for the remainder of the year,” Anglo said in a statement.The company said net profit before exceptional items in the six months to June 30 rose to US$1,78 billion (N$11,4 billion), versus US$1,25 billion a year ago and compared with a Reuters survey forecasting US$1,79 billion.On a per-share basis, headline earnings rose to US$1,24, while operating profit was up 28 per cent at US$2,98 billion.”These results are OK …but they are a bit disappointing in base metals and coal,” said one analyst at a major investment bank in London who asked not to be named.The earnings contribution from coal rose to US$263 million, below a company-polled analyst estimate of US$325 million, and base metals earnings stood at US$525 million, or US$67 million shy of forecasts.Better-than-expected results from subsidiaries De Beers and Angloplat, released in recent weeks, helped Anglo to hit its numbers, as did cost savings of US$303 million, only US$47 million short of its full-year target.Asked if Anglo could beat its annual cost-cutting target, Finance Director Tony Lea told journalists: “We would hope to be able to do that”.Base Metals still accounted for the biggest chunk of operating earnings dominated by copper, which is used in electrical wiring and water piping.Global prices gained 9,4 per cent in the first half and have kept rising since, buoyed by demand from China, which takes in one-fifth of the world supply.Anglo said the outlook for most of its commodities remained sound.It produces a variety of products from gold and platinum to building aggregates and paper, but is less favourably exposed than peers BHP Billiton and Rio Tinto to rapid Chinese industrialisation.Rio on Wednesday reported that its profit had more than doubled during the same six month period.The firm raised its interim dividend to 28 US cents from 19 cents a year ago.-Nampa-Reuters”If Chinese demand continues at current levels and prospects for OECD growth improve in the second six months, the group’s earnings should remain strong for the remainder of the year,” Anglo said in a statement.The company said net profit before exceptional items in the six months to June 30 rose to US$1,78 billion (N$11,4 billion), versus US$1,25 billion a year ago and compared with a Reuters survey forecasting US$1,79 billion.On a per-share basis, headline earnings rose to US$1,24, while operating profit was up 28 per cent at US$2,98 billion.”These results are OK …but they are a bit disappointing in base metals and coal,” said one analyst at a major investment bank in London who asked not to be named.The earnings contribution from coal rose to US$263 million, below a company-polled analyst estimate of US$325 million, and base metals earnings stood at US$525 million, or US$67 million shy of forecasts.Better-than-expected results from subsidiaries De Beers and Angloplat, released in recent weeks, helped Anglo to hit its numbers, as did cost savings of US$303 million, only US$47 million short of its full-year target.Asked if Anglo could beat its annual cost-cutting target, Finance Director Tony Lea told journalists: “We would hope to be able to do that”.Base Metals still accounted for the biggest chunk of operating earnings dominated by copper, which is used in electrical wiring and water piping.Global prices gained 9,4 per cent in the first half and have kept rising since, buoyed by demand from China, which takes in one-fifth of the world supply.Anglo said the outlook for most of its commodities remained sound.It produces a variety of products from gold and platinum to building aggregates and paper, but is less favourably exposed than peers BHP Billiton and Rio Tinto to rapid Chinese industrialisation.Rio on Wednesday reported that its profit had more than doubled during the same six month period.The firm raised its interim dividend to 28 US cents from 19 cents a year ago.-Nampa-Reuters