Anglo American cements alliance with Lafarge

18th Feb 2011 07:04

Miner Anglo American doubled profits in 2010 and is merging its UK cement, aggregates and ready-mixed concrete business with French giant Lafarge.Underlying earnings leapt to $4.98bn last year from $2.57bn in 2009 on revenue up 34% to $32.93bn. Profit before tax rose 171% to $10.93bn and underlying earnings per share of $4.13 was better than expected.Surging commodity prices were behind much of the increase, but chief executive Cynthia Carroll also pointed to $2.5bn of asset optimisation and procurement benefits from its core operations. The target for all of 2011 was $2bn."The productivity benefits that we have achieved have also enabled us to leverage the benefits of higher commodity prices," Carroll said. "I expect the value we unlock from asset optimisation in particular to increase further as we embed these best in class practices and continue to improve our operational performance."Anglo has four major projects making "excellent" progress, keeping the business on target for near term production growth of 50% by 2015. A new mining operation will start up every six to nine months over the next few years.About $3.3bn of non-core businesses have been sold so far and there's strong interest in the other bits Anglo is trying to get rid of.It's also agreed a 50:50 joint venture with Lafarge to merge the pair's UK cement, aggregates, ready-mixed concrete, asphalt and contracting businesses to create a British construction materials firm.The combined sales of the two businesses, which includes Anglo's Tarmac UK, in 2010 were £1.8bn and earnings before interest, tax, depreciation and amortisation (EBITDA) was £210m. At least £60m of recurring synergies are expected each year.A final dividend of 40 cents a share takes the total payout to 65 cents.