Diversified miner Xstrata rode a wave of higher metals prices in a particularly good second quarter. Specifically, half-year operating profits nearly doubled year-on-year to $3.2bn (£2.1bn) after Xstrata held down costs at its nickel and zinc operations and responded to increased coking coal demand from steel makers.
This cost discipline - nickel production cash costs were $2.50 a pound, while cash costs for zinc production were 18 per cent lower at 36¢ a pound - contributed to total sustainable cost savings of $243m after productivity improvements at its Mount Isa and McArthur river operations in Australia yielded $66m in savings. Xstrata also approved $4.2bn of investment at its Las Bambas site in Peru, as well as a $1.1bn of capital investment for its Ulan West coal mine in Australia, which will add another 6.7m tonnes of production capacity. Xstrata now has a pipeline of 15 projects under construction with a total capital budget of $14bn.
Chief executive Mick Davis said the short-term economic outlook was "mixed" with a "three-speed" global economy likely to persist for some time. But China, Brazil and India are set to provide the main source of growth, he added. Evolution Securities expects full-year pre-tax profits of $7.8bn, giving EPS of 155¢ ($3.97bn and 103¢ in 2009).
XSTRATA (XTA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,080p | MARKET VALUE: | £31.7bn | |
| TOUCH: | 1,079-1,081p | 12-MONTH HIGH: | 1,344p | LOW: 713p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 1,143¢* | NET DEBT: | 24% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 9.54 | 1.09 | 29 | nil |
| 2010 | 13.6 | 3.21 | 79 | 5.00 |
| % change | +43 | +194 | +172 | - |
Ex-div: 15 Sep Payment: 8 Oct *Includes intangible assets of $8.26bn, or 281¢ a share £1=$1.56 | ||||
