Afternoon:
10°c
Mining giant Anglo American today made its case for remaining independent despite a plunge in profits by emphasising its cost-cutting measures.
Anglo is fending off rival Xstrata's advances for a merger of equals, and said it would consider asking the Takeover Panel to impose a put up or shut up deadline in the future. “It is an option that we might use down the line,” said Anglo's spokesman.
Xstrata will make its case for a merger – which would create the world's third biggest listed miner – next week when it posts results.
In its first detailed statement since the proposal, Anglo posted a 44% drop in pre-tax profits from $6.5 billion to $3.6 billion (£2.1 billion) for the first six months of the year, as metals prices almost halved from last year's highs.
Revenue fell from $17.92 billion to $11.13 billion.
Underlying earnings plummeted almost 70% to $1.1 billion, but its shares rose 20p to 1925½p as it beat analysts' forecasts.
However, Anglo, which produces platinum, coal, iron ore and copper, said it has achieved $450 million of its planned $2 billion in cost savings forecast for the next two years in the first six months of the year.
It expects to reduce its costs by $1 billion in total in 2009. The company has already cut 15,405 of the 19,000 staff members due for the axe by the end of the year. This constitutes 11% of its global workforce.
Anglo was also keen to stress growth at its nickel and iron ore projects in Brazil, and its copper project in Chile. Chief executive Cynthia Carroll is under pressure from shareholders to deliver savings after coming under fire for spending $5.5 billion on South American assets during the commodities boom. She warned the outlook remains tough for the company:
“Demand will remain soft in the near term until developed countries begin economic recovery.
“While we have seen some recovery in metals prices, macro economic indicators are mixed and the economic outlook remains uncertain in the near term.” Its platinum arm, which is being restructured, has been hard hit by the decline in the global automotive industry as the metal's main use is in catalytic converters for cars.
But it has seen strong demand for platinum on the investment side and from China for jewellery, as investors look to put their money where they can see it.
Carroll appointed Neville Nicolau as chief executive of its platinum unit last year in part to cut the number of accidents at its mines after 25 workers were killed in 2007.
