Sellers pressed the panic button in spite of Eurasian Natural Resources' (ENRC) impressive 129 per cent hike in underlying first-half cash profits to $1.44bn (£916m).
The mining group's 67 per cent rise in like-for-like revenues owes much to strong growth in China, where an economic stimulus package last year helped prop up carbon and stainless steel prices. Yet investors honed in on worries over short-term commodity price volatility and sovereign debt trouble in Europe, sending the shares spinning 5 per cent lower. Investors will have also been concerned about the spike in costs - cost of sales shot up 45 per cent to $1.32bn in the half - and ENRC notes that "the management of costs remains a challenge".
ENRC hopes to offset potential market weakness by diversifying away from its core steel operations into copper, cobalt and platinum in Africa. In May, the group paid around $296m for a 12.2 per cent stake in Northam Platinum, a South African platinum company, having a month earlier completed the purchase of Zambian copper and colbalt producer Chambishi Metals in a similar sized deal. These acquisitions build on the copper and cobalt assets that came with last year's $931m CAMEC deal.
Analysts expect full-year EPS of 110¢ (from 81¢ in 2009).
EURASIAN NATURAL RESOURCES CORP (ENRC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 920p | MARKET VALUE: | £11.9bn | |
| TOUCH: | 920.5-921p | 12-MONTH HIGH: | 1,276p | 763p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 660¢ | NET CASH: | $70m | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 1.70 | 0.75 | 43 | 6.0 |
| 2010 | 3.05 | 1.23 | 70 | 12.5 |
| % change | +80 | +64 | +63 | +108 |
Ex-div: 25 Aug Payment: 7 Oct £1=$1.567 | ||||
