Anglo American's annual profits boosted by currency gains

14th Feb 2014 07:08

- Operating profit rises on currency gains- Earnings fall on lower prices- Safety issues impact production at Kumba- Headwinds to continue in 2014Anglo American reported a six per cent increase in 2013 underlying operating profit to 6.6bn dollars as currency gains offset falling commodity prices.The company said a weak South African rand against the dollar, improved copper and platinum sales and the contribution of its increased stake in De Beers helped to boost annual results. Pre-tax profit for the year to December 31st came to $1.7bn, compared to a loss of $171m a year earlier. Underlying earnings fell 7% to $2.67bn, owing mainly to lower realised prices.During the period the company was forced to review safety measures at operations after 14 employees and contractors died in work related incidents. Two employees are still missing. "We are elevating our focus on achieving zero harm in the workplace, through leadership behaviours at every level, business processes and further strengthening of major risk hazard assessments," the firm said.The also had to contend with safety stoppages at Kumba Iron Ore which hurt production. While there were no deaths at the South African mining business, there was a worsening in injuries. Total iron ore output fell 2% to 42.4m tonnes as a result. However, underlying operating profit at the business increased slightly from $3.042bn to $3.047bn as a result of a 1% increase in average export iron ore prices and a weaker South African rand, partly offset by a 1% decrease in export sales volumes. Copper production rose 17% to 775,000 tonnes, driven by Los Bronces from the fully ramped up Confluencia plant and improved ore, and higher grades and recoveries at Collahuasi.Metallurgical coal output was up 25 to 31.2m tonnes, bolstered by longwall improvement programmes at Moranbah North and Capcoal's underground operations. Thermal coal output, on the other hand, dropped 2% to 67.6m tonnes as wet weather interrupted operations at New Vaal and strikes impacted Cerrejón.Nickel production fell 12% to 34,400 tonnes following the termination of production at Loma de Níquel from September 2012.Platinum and diamond output edged by 5% and 12%, respectively. Net assets at the end of the period were $6.4bn lower than a year ago due to net movements in equity including currency translation adjustments, dividends and retained earnings in the year.Total net debt came to $10.7bn at the end of the period, up from $8.5bn in 2012.Capital expenditure rose from $6.03bn in 2012 to $6.26bn in 2013, as a result of the higher investment at Minas-Rio and Grosvenor, and the increased holding in De Beers.Chief Executive Mark Cutifani said the company was making headway in its so-called Driving Value strategy to restructure the business and address tough market condition. "While I expect headwinds to continue in 2014 as we reset the business, the benefits of much-improved operational processes and performance will flow through largely in 2015 and 2016, he said. "In the immediate-term, we have already delivered significant sustainable improvements, including early operational improvements, overhead reduction and reducing early-stage project expenditure."He said the world economy should strengthen this year and next and China should continue to grow by 7%.RD