Anglo American H1 earnings rise but profit drops 10%

25th Jul 2014 07:44

Anglo American reported a 3% rise in underlying half-year earnings, lifted by an improved business performance and depreciating producer currencies, although this was partially offset by input cost inflation, the effect of the platinum strike and lower prices, primarily in bulk commodities. Underlying earnings for the six-month period totalled $1.3bn, up 3% year-on-year, although underlying operating profit declined 10% from $3.3bn to $2.9bn. The mining industry as a whole has seen soft demand and declines in the majority of the commodities that Anglo produces and said uncertainty was likely to persist for much of 2014, although there was "some encouraging signs that activity is strengthening in our key markets". The lower prices included a 23% decrease in achieved Australian export metallurgical coal prices, a 17% decrease in achieved iron ore prices at Kumba and a 3% decrease in realised copper prices. The five-month strike at its platinum mines in South African cut output by 40%. It said: "Continuing weak global economic growth, coupled with increases in seaborne commodity supply, led to a further decline in many commodity prices. The lower price environment and platinum strike impact more than offset currency gains and improved business performance."Generally lower realised prices of commodities resulted in a reduction of $1.0bn in underlying operating profit [which was ...] partly offset by the weakening of producer currencies ($0.8bn) and improved operational performance. Production increases were delivered at the Coal, Iron Ore, Copper, De Beers, and Nickel businesses. Other businesses were impacted by a number of events, including strikes and inclement weather." Lower operating profit from certain regions resulted in return on capital employed (ROCE) declining from 11% to 10% year-on-year. The group declared an interim dividend of 32 cents per share, on par with the same period last year. NR