Business
Anglo's profit drops 10%─── 12:42 Fri, 25 Jul 2014
Cape Town - Anglo American's underlying operating profit fell 10 percent in the six months to June, according to interim results released on Friday.
The drop from $3.2 billion to $2.9bn could be attributed to continuing weak global economic growth and weak commodity prices.
Anglo American's underlying earnings were $1.3bn, three percent higher than the same period last year.
The company's platinum arm, Anglo American Platinum (Amplats), recorded an underlying operating loss of $1 million, compared to an underlying operating profit of $187m in the first half of last year.
This weak performance was due to significantly lower production resulting from a five-month long strike by Association of Mineworkers and Construction Union (Amcu) members.
Amcu members at Lonmin, Amplats, and Impala Platinum downed tools on January 23, demanding a basic monthly salary of R12 500.
The companies signed a three-year wage agreement with Amcu on 24 June, ending the strike. In terms of the agreement, the salary of the lowest-paid worker would increase by R1000 in the first two years and R950 in the third year.
Amplats' Rustenburg, Amandelbult and Union operations were affected.
According to the interim results, these operations lost 424,000 ounces of equivalent refined production during the strike and a further 16,000 platinum ounces in the ramp-up period.
"Although operating costs savings were implemented at strike-affected operations, costs of approximately $400m were incurred at these mines during the strike period."
Amplats CEO Chris Griffith announced on Monday that the company was planning to sell some of its Rustenburg and Union mines.
In the interim results report, Anglo American CEO Mark Cutifani wrote that it was re-focusing on assets that offered the best potential value over the short and long-term.
"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," he said.
"I expect our divestments and improved business performance to support a long-term net debt target of $10bn to $12bn."
Anglo American's diamond operation De Beers recorded a 34 percent increase in underlying operating profit, to $765m.
De Beers enjoyed a solid demand across key markets and favourable exchange rate trends.
Production increased by 12 percent to 16 million carats following a strong performance by Debswana and local operations.
Anglo American posted an interim dividend of $0.32 a share.
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