Anglo Beats Profit Estimates, May Change Platinum-Unit Size

Anglo Beats Profit Estimates, May Change Platinum-Unit Size

Anglo American Plc, a producer of
metals and minerals from Africa to Brazil, said profit climbed
23 percent, beating estimates, and is considering changing the
size of its platinum unit to restore returns.
Underlying earnings climbed to a record $6.12 billion, or
$5.06 a share, in the 12 months through December from $4.98
billion, or $4.13 a share a year earlier, the London-based
company said today in a statement. That compares with the $4.67
median estimate of 23 analysts surveyed by Bg News. Anglo
will pay a dividend of $0.46 a share, compared with Bg’s
forecast of $0.44.
Chief Executive Officer Cynthia Carroll, like her rivals at
BHP Billiton Ltd. and Rio Tinto Group, is expanding iron-ore,
copper and coal mines on a forecast for demand growth in Asia.
The Standard & Poor’s GSCI Spot Index of 24 commodities averaged
668.92 last year, 25 percent higher than in 2010. Anglo may
spend $98 billion on more than 85 projects to double production,
the company said today, without stipulating the period.
“Tempering exuberance, the beat is due to lower-than-
expected depreciation and tax charges,” Liberum Capital Ltd.
said in a note today, referring to adjusted earnings.
Anglo rose for the first time in four days, gaining 1
percent to 2,669 pence by 11:49 a.m. in London. BHP, the biggest
mining company, advanced 0.3 percent while Xstrata Plc increased
2.1 percent.

‘Size and Shape’

Anglo American Platinum, the world’s largest producer of
the metal, earlier this week cut its 2012 output target and put
a freeze on employment after annual profit slid 64 percent to
3.59 billion rand ($463 million) and as Europe’s debt crisis
weighs on metal prices. Returns at Anglo American Platinum are
not in keeping with the levels Anglo expects, Carroll told
reporters on a call today.
“We are looking at the size and the shape of the platinum
business and how we can fundamentally shift it and return it to
the sort of returns we had in 2008,” she said. Anglo should
look at “how much we should be recycling, how much we should be
driving the downstream part.” It won’t make decisions on this
until the “latter part” of the year, she said.
Anglo will assess unprofitable mines or examine the
“configuration” of the business, she told investors.
Anglo owns about 77 percent of Anglo American Platinum. It
also has 45 percent of diamond miner De Beers and has offered
$5.1 billion to boost its stake to as much as 85 percent.
Platinum and diamonds are part of the so-called late-cycle
commodities that set Anglo apart from its rivals. Their price
movements typically lag behind other commodities and can bridge
profit at times when other commodity prices fall.

Codelco Dispute

“Anglo has scale, breadth of commodities, financial
wherewithal,” Carroll told Bg Television today.
Referring to Glencore International Plc’s 23.8 billion-pound
($37.7 billion) bid for Xstrata Plc, she said “it really
doesn’t change anything from a competitive standpoint.”
The company has “reached out” to resolve a dispute over
ownership of its Chilean copper unit, Carroll told reporters on
the call today. Anglo has not been able “to reach a settlement
with Codelco that takes into account Anglo’s strong legal
position,” Carroll told investors in London.
Talks broke down between the two sides on Jan. 31,
Santiago-based La Tercera said Feb. 14, citing state-owned
Codelco’s CEO, Diego Hernandez.

Future Growth

Carroll doesn’t see the dispute hindering future growth in
Chile, the world’s largest copper-producing nation, she told
investors.
Anglo may complete non-core disposals, which have seen it
selling businesses from sugar to paper, with the sale of its
Scaw steel business in South Africa this year, Carroll told
reporters.
Analysts that track Anglo American use underlying earnings,
excluding special items and “re-measurements” that include
some currency gains and losses, to assess performance.
Second-half adjusted earnings rose 8.3 percent to $2.48 a
share from $2.29 a year earlier, Anglo said in an e-mailed
statement. The company’s annual net income fell 6 percent to
$6.17 billion from $6.54 billion.
“Overall this result is in line or marginally below –
adjusting for one-offs — expectations at the operating profit
level but the total result is better than expectations on a
lower tax rate” of 28.3 percent from 31.9 percent, Deutsche
Bank AG analysts wrote in a note.