Anglo American has released its 1H14 interim results, which show continuing improvement in operating performance against a backdrop of weaker commodity prices.
- Improved business performance, reflecting a greater focus on mining processes and costs, underpins turnaround strategy.
- Higher volumes across most of the company’s portfolio, with cash costs down 2%.
- Headwinds of weaker commodity prices (US$1 billion underlying operating profit impact) and the effects of the platinum strike (US$385 million).
- Group underlying profit of US$2.9 billion for 1H14, a 10% decrease.
- Long-term net debt target of US$10 – 12 billion, supported by increased operating cash flows and divestment proceeds from refocusing of portfolio.
Commenting on the results, Mark Cutifani, CEO, said: “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.
“Looking at our allocation of capital across the portfolio, we have resolved to refocus on those assets that offer us the greatest source of potential value – over the short and long term – and that best match our chosen areas of focus and skills to drive returns.”
Cutifani added: “Safety is the clearest indicator of how we are managing the business and is always my first priority. We recorded the first quarter of 2014 with no loss of life and this positive trend in safety performance is continuing, with the key indicators all showing improvement.
“Our total recordable case frequency rate of 0.74 is a 31% improvement compared to FY 2013 and the lowest level ever achieved by Anglo American, while recognising that the platinum strike did contribute to some of the safety improvements. We have made progress but it is unacceptable that three of our people have lost their lives in the first six months of this year and that others suffered injury. We are focused on five key areas which are characteristic of effective and sustainable safety management: leadership, planning, risk management, incident management and effective frontline supervision.”
“As we look at the global economic outlook, uncertainty is likely to persist for the balance of 2014, though there are some encouraging signs that activity is strengthening in our key markets. Our diversified portfolio positions us well for the potential significant further urbanisation and industrialisation required to support growth in China and other emerging economies, while an expanding middle class is expected to support a rising intensity of consumption for our late cycle products. Over the long term, we expect new supply to be constrained and to see tightening market fundamentals and a recovery in price performance,” Cutifani concluded.
The full report can be accessed on the Anglo American website.
Adapted from report by Katie Woodward
Read the article online at: https://www.worldcement.com/the-americas/28072014/anglo-american-1h14-profit-of-us-2-9-billion-184/