Anglo Posts $5bn Operating Profit

| Monday February 22, 2010 00:00

Anglo said that $4,5-billion of the operating profit was from core operations.Underlying earnings of $2,6-billion and underlying earnings a share of $2,14 were reported. Profit attributable to equity shareholders was $2,4-billion and net debt was held at $11-billion. Committed undrawn bank facilities and cash as at December 31, 2009, totalled $12-billion.

The company, headed by CEO Cynthia Carroll, said that asset optimisation and procurement efficiencies had realised savings of more than $1,6-billion, $1,4-billion of which was from core operations. An asset optimisation and procurement target of $2-billion has been set from core businesses alone by 2011.

Anglo Platinum came in for praise for achieving its 'significant' restructuring, meeting its flat cash operating costs target and increasing labour productivity by 21 percent in two years.

Cash cost reduction of $712-million or 5 percent and productivity improvements had been achieved across the group, with the head count reduced by 23 400. Major reorganisation had now been completed and a new generation of leadership created within a leaner, more effective structure.Growth of selected commodities was under way through a $17-billion pipeline of approved projects to drive organic production growth of more than one-third by 2013. Copper was set to grow by 33 percent, iron-ore by 82 percent and nickel by 139 percent.

Four strategic projects on track were the Minas Rio, Los Bronces, Barro Alto in South America and the Kolomela - previously called Sishen South, the South African iron-ore project. New growth projects included the Quellaveco copper project in South America and the Grosvenor metallurgical coal project in Australia, with first-stage approvals expected in 2010.

On safety, there had been a 57 percent reduction in fatalities and a 52% improvement in lost time injury rates since January 2007. On a like-for-like basis, Anglo Platinum had achieved four consecutive fatality-free months through to January 2010.

A resumption of the payment of a dividend was expected for this year. Net cash inflows from operating activities were $4-billion compared with $8 065-million in 2008. Earnings before interest, tax, depreciation and amortisation (ebitda) were $6,9-billion, a decrease of 42 percent from $11,8-billion in 2008.

Proceeds from the sale of financial assets totalled $2-billion, including net cash inflows on the sale of shares of AngloGold Ashanti and proceeds on the sale of preference shares as part of the disposal of the Booysendal joint venture.

Purchases of tangible assets amounted to $4,6-billion, a decrease of $539-million. This spend was focused on the four key near-term strategic growth projects at Los Bronces, Barro Alto, Minas Rio and Kolomela. The overall reduction reflected the planned reduction in capital investment outside these key projects. Net cash used in financing activities was $1,6-billion, compared to net cash inflows in 2008 of $3,5-billion.

During the year, the group used cash to repay $6,6-billion of short-term borrowings and the payment of $741-million of interest. This was partially offset by the proceeds of four bond issuances completed in the year, totalling $5,9-billion. Net debt, excluding hedges, was $10,9-billion, a decrease of $48-million from 2008.(Reuters)