London - Anglo American said first-half profit rose on higher output and lower production costs at its copper division, as chief executive Mark Cutifani reviews assets to offload underperforming businesses.
Underlying earnings gained to $1.28 billion (R13.5 billion), or $1 a share, from $1.25 billion, or 98 cents a share, a year earlier, the London-based producer of iron ore, copper, coal and diamonds said today in a statement.
That beat the $1.15 billion average of analyst estimates compiled by Bloomberg.
Anglo will pay a dividend of 32 cents a share.
Cutifani, who began a review of assets from Australia to Brazil after joining Anglo in April last year, plans to double return on capital to at least 15 percent by 2016 from about 8 percent in June 2013.
He will consider selling any asset that pulls down the average.
The company is putting four platinum mines and possibly two joint ventures up for sale in South Africa at its Anglo American Platinum unit, it said July 21.
Amplats, as the Johannesburg-based unit is known, is seeking buyers for the assets after first-half profit collapsed 88 percent because of a five-month strike that ended on June 24.
“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,” Cutifani said in today’s statement.
“I expect our divestments and improved business performance to support a long-term net debt target of $10 billion to $12 billion.”
Sprawling Group
Of 69 assets held by the sprawling group, 31 are delivering just 2 percent of earnings before interest and taxes, Cutifani said in a May interview.
The new management team has seen signs of improvement in 15 of the 31 assets in the past year, while 16 of them “still have a lot of work to do,” he said.
On July 7 Anglo agreed to sell its half of Lafarge Tarmac to its joint venture partner Lafarge SA for at least $1.5 billion.
Anglo plans to start producing its first iron ore in Brazil by the end of the year after cost over-runs and delays at its Minas Rio project.
“At the end of June, we had completed 95 percent of the project required to achieve this objective,” Cutifani said.
“We are commissioning all areas of the operation and expect to complete within the budgeted total capital cost of $8.8 billion.”
Anglo’s iron-ore output in the first half rose to 11.5 million metric tons from 11.3 million tons a year earlier, it said July 17.
Copper grew 6 percent to 194,400 tons, while platinum equivalent refined output slid 40 percent to 358,000 ounces.
Anglo’s copper division contributed $760 million to underlying profit, 20 percent higher than a year earlier, according to today’s statement.
Anglo also mines diamonds in southern Africa and Canada.
Production at De Beers, the gem producer it owns, gained 7 percent in the second quarter to 8.5 million carats. - Bloomberg News