Anglo profits soar

ANGLO American’s half-year profit has surged by 263% and CEO Mark Cutifani said he was happy with the company’s turnaround but there was more to do.
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Mark Cutifani

Kristie Batten

Underlying operating profit dropped 10% to $US2.9 billion ($A3.08 billion) for the six months to June 30, with the iron ore and manganese division largest contributor, posting an underlying operating profit of $1.22 billion.

Cutifani said weaker commodity prices impacted earnings by $1 billion, offsetting higher volumes and a 2% drop in cash costs.

“The diversification in our portfolio has been helpful,” he said.

Underlying earnings rose by 3% to $1.2 billion on revenue of $16.1 billion.

The profit before tax was up 48% to $2.9 billion, while the profit attributable to shareholders jumped 263% to $1.4 billion.

Cutifani noted that performance was “patchy” across some divisions, though all sectors of the business posted productivity improvements, aside from platinum, which was hit by a five-month strike.

“We’re getting the basics right,” he said.

“There’s been good progress on the things that we view as important.”

Attributable return on capital employed (ROCE) dropped 1% to 10%, still a way off the target of 15% Cutifani set when he took over as CEO last year.

“Anything under 15% for me is unacceptable,” he said.

While noting that he was unhappy with that aspect of the result, Cutifani said pricing and inflation wiped 3% off ROCE, while the platinum strike shaved 1% off.

“To qualify that, I’m happy with the progress we’re making to close that gap,” he said.

The company has a long-term net debt target of $10-12 billion with debt totalling $11.5 billion at the end of June.

Meanwhile, Cutifani said the 26.5 million tonne per annum Minas-Rio iron ore project remained on track for first ore on ship by the end of the year.