Anglo profits slide

Posted by Elizabeth Bluemink

Posted: August 1, 2009 - 4:34 pm

Comments (0) |

Anglo American, the London-based company investing millions to develop Pebble, reported this week that its profits are down over 31 percent for the first half of 2009.

Here's the Associated Press story:

LONDON — Mining company Anglo American PLC said Friday that net profit in the first half of the year fell by 31 percent as earnings from platinum, diamonds and industrial minerals slumped amid the global recession.

The company said net profit for the period was $2.97 billion, compared to $4.28 billion a year earlier. Revenue was down 38 percent to 11.1 billion.

"Anglo American's performance was impacted by the sharp declines in commodity prices against the prior year and anticipated reductions in volumes, partially offset by exchange rate benefits compared to the first half of 2008," said Cynthia Carroll, the company's chief executive.

The company did not announce a dividend for the first half.

Anglo American shares closed up 1.3 percent at 1,930 pence on the London Stock Exchange.

In May, Anglo American rejected a merger overture from Xstrata, its Anglo-Swiss rival. The proposed combination would create a group worth $68 billion, ranking the combined company behind BHP Billiton and Rio Tinto.

"This is a good set of results and comes at a time when the group is looking to fend off an approach from Xstrata," said Jonathan Jackson, analyst at Killik & Co. in London.

"The mining sector has been a strong performer in the recent market rally as investors have sought a liquid way to gain exposure to a recovery in global GDP," Jackson said, adding that Xstrata's interest should help sustain Anglo American shares if the market stalls.

Anglo American said profit from platinum and diamonds was down 99 percent, and profit from industrial minerals fell 83 percent, while coal profit fell just 2 percent.

The company, which has set a target of $2 billion in annual cost savings, said it delivered savings of $450 million in the first half and expected to exceed $1 billion for the full year. It cut 15,400 jobs in the first half, with a goal of 19,000 total this year.

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Click here to read a Wall Street Journal story with some additional analysis of Anglo's financial prospects. (If the link doesn't work due for you due to a firewall, try accessing the WSJ story online with a Google search.)

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