Cutifani streamlines

AS ANGLO American’s half-year profit slumped by 68%, chief executive Mark Cutifani has outlined a new-look management team and plans to boost the company’s performance.
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Mark Cutifani

Kristie Batten

The company’s underlying profit fell 15% to $US3.3 billion ($A3.5 billion), while underlying earnings before interest, tax, depreciation and amortisation were down 7% to $4.7 billion.

Profit attributable to shareholders plummeted by 68% to $400 million.

CEO Mark Cutifani said it was disappointing in the context that it was his first set of results.

“But when you look at the underlying performance, there is improvement,” he said.

The company said operationally, Australian metallurgical unit costs dropped 18%, partially offsetting a fall in coal prices, while Kumba Iron Ore and the copper business also performed well.

At the 5 million tonne per annum Grosvenor coal project in Australia, capital costs rose by $250 million to $1.95 billion mainly due to geotechnical changes, with first longwall production due at the end of 2016.

The 26.5Mtpa Minas-Rio project was progressing in line with plans, with first ore on ship due by the end of next year.

Anglo cut 2013 capital expenditure by $1 billion due to the current market conditions.

Under Cutifani, Anglo will target a $1.3 billion per annum uplift in cash flow with a new business model to drive accountability.

The savings will be via commercial and marketing cuts of $500 million per annum, overhead savings of $500 million annually and a $300 million per annum cut to early stage projects.

Meanwhile, Cutifani has made a number of organisational changes to reduce the number of direct reports to him – previously at 16 – describing it as “natural” consolidation.

He appointed his former AngloGold Ashanti colleague Tony O’Neill as technical group director.

The company’s 10 business units will be consolidated into six groups, with metallurgical and thermal coal combined under the leadership of Seamus French.

Copper, nickel, niobium and phosphates have been combined under base metals with Duncan Wanblad as the leader.

The other units are Kumba, platinum, De Beers and iron ore Brazil.

Mining and technology group director Brian Beamish and business performance and projects group director David Weston have resigned.

Cutifani said he was “pleasantly surprised” by the quality of Anglo’s assets but the challenge was to meet their potential.

He added that he was comfortable with the suite of commodities the company was in, though there were price issues with some, such as nickel.

Cutifani said shareholders could expect “an absolute manic focus on value and returns”

“No big radical changes but a focus on margins and generating returns,” he said.

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