LONDON (Alliance News) - Anglo American PLC Friday said its pretax profit jumped in its first half, despite falls in profit at its Anglo American Platinum Ltd and Kumba Iron Ore Ltd subsidiaries, as improved performance, particularly at its copper operations, helped the company.
The FTSE 100 miner said its pretax profit increased by 48% to USD2.95 billion for the six months ended June 30 from USD1.99 billion the previous year with production volumes up across its portfolio except platinum, with particular development at its copper division.
The company said a 3% increase in its underlying earnings, which excludes special items and remeasurements, was down to greater focus on mining processes and costs, with its copper operations recording a 20% growth in underlying operating profit to USD760 million due to lower unit costs and increased sales volumes.
"Anglo American's improved business performance, assisted by depreciating producer currencies, partially offset the headwinds of input cost inflation, the effect of the platinum strike and lower prices, primarily in bulk commodities. This performance underlines the merits of our business strategy of commodity and geographic diversification," Chief Executive Mark Cutifani said in a statement.
However, due to generally lower realised prices for commodities and a reduction in revenues at its platinum operations due to strikes in South Africa, the company's revenues fell slightly to USD14.22 billion from USD14.41 billion and its overall underlying operating profit fell 10% to USD2.93 billion.
The company held its interim dividend per share at USD0.32, in line with the company's strategy to provide a base dividend.
The news comes after Anglo American's subsidiary Kumba Iron Ore said on Tuesday that it will contribute USD409 million to the company in the six months, a fall of 29% due to lower export iron ore prices and costs from increased mining activities.
On Monday, Anglo American Platinum Ltd, the platinum mining subsidiary of Anglo American, said that it will contribute an underlying loss of USD1 million for the six month period, after contributing an underlying profit of USD92 million to Anglo American results the previous year.
Anglo American Platinum reported IFRS headline earnings of USD14 million, compared to USD140 million a year ago as five months of strike action by South African platinum miners hit operations.
However, on the same day Anglo American unveiled plans to sell off major platinum mines in South Africa, as part of its ongoing platinum review. It said the decision has been made to exit its Union and Rustenberg mines, along with its Pandora joint venture operation through sales or public market exits. It is also contemplating an exit from its Bokoni joint venture operations.
The new divestment programme could cut staff in South Africa by 20,000, according to The Sunday Times, only a month after a five-month long strike ended in the country.
The move could represent cuts of a fifth of the company's overall workforce and is a key part of Mark Cutifani's plans to cut costs and improve the company's operations since he took over as chief executive last year.
"We plan to divest a number of other assets at the appropriate time and to redeploy that capital to support our drive for higher returns. I expect our divestments and improved business performance to support a long-term net debt target of USD10 to USD12 billion," Cutifani said on Friday.
Anglo American separately announced on Friday that it has reached a binding agreement to sell its 50% ownership interest in Lafarge Tarmac Holdings Ltd to Lafarge SA for a minimum of USD885 million in cash.
The company said earlier this month that it has reached an agreement in principle to sell the stake in Lafarge Tarmac, which supplies aggregates and asphalt from more than 70 production plants and over 100 quarries in the UK, and develops sustainable readymix concrete, lime and powder, and cement products.
The company said the sale is being made as Lafarge SA plans to offer a full divestment of the joint venture to the European Commission as part of an ongoing proposed merger between Lafarge and Holcim Ltd. The two major cement makers are being forced to shed a large range of assets so that the merger meets European competition regulations.
The merger is expected to be completed in the first half of 2015, and both Anglo American and Lafarge will work towards completing the final terms of a definitive agreement on Anglo's sale of interest during the third quarter this year.
Anglo American shares were up 0.5% to 1,593.50 pence, putting it amongst the top FTSE 100 risers during early trading on Friday.