Anglo shoots the roof with Interim Results

4 August, 2006 at 5:11 pm | Posted in Companies | Leave a comment

Anglo American Plc (AGL) has posted record Interim Earnings results for the six months ended 30 June 2006 of close to R17.2 billion (US$2.5 billion). The results came out today just after 3pm and saw the share price of the company rocket 4.42%, even trading as high as R308.49, to finish at R302.50.

According to the company, the results:

Anglo American announces record underlying earnings of $2.5 billion, up         
47%, additional $5 billion capital return and update on Strategic Review        
*Operating profit (1) increased to $4.6 billion, up 52%                         
*Record underlying earnings (2) of $2.5 billion, up 47%, impacted by higher     
tax charges                                                                     
*Cash generation (EBITDA (3)) of $5.9 billion, up 37%                           
*Strong performances from mining businesses                                     
*Further $4 billion buyback announced                                           
*$1 billion special dividend (67 cents per share)                               
*Interim dividend increased from 28 to 33 cents per share, up 18%.              
Significant progress made in meeting our strategic targets:                     
*AngloGold Ashanti disposal underway, initial $1 billion realised               
*Plans to demerge Mondi being developed                                         
*In depth review of Tarmac completed; restructuring on track                    
*Disposal of holding in Highveld Steel announced                                
*Tongaat-Hulett: Hulett Aluminium unbundling is progressing                     
Leading to:                                                                     
*Simplified Group structure                                                     
*Focused core mining portfolio                                                  
*World class portfolio of assets                                                
*Strong growth prospects underpinned by project pipeline

The company has been buying back its shares by the bucket-load recently, and the results have beaten even the most bullish of predictions. While much of the gains have been attributed to rising commodity prices,the company has also managed to realise real gains in the sale of large stakes in Highveld Steel and Vanadium, as well as AngloGold Ashanti.

CEO Tony Trahar said:

This has been a very successful six months, both in terms of the               
performance of Anglo American and the implementation of our strategy.           
Anglo American has again produced record results - with underlying earnings     
up 47% to $2.5 billion. While these were achieved against a backdrop of a       
favourable trading environment they are also testament to the strong            
underlying performance of our divisions, especially the mining businesses.      
There have been operating challenges, such as the industry-wide cost            
pressures in some operations, and we have continued with focused cost           
containment and efficiency programmes to mitigate these pressures.              
At the same time, we have taken significant strides in delivering our           
strategy, simplifying the Group structure and focusing on our core mining       
portfolio. We have reduced our stake in AngloGold Ashanti, Tarmac"s             
restructuring is on track, the disposal process for Highveld Steel has been     
announced and plans are being developed to demerge Mondi. Further, we are       
announcing today the return of $5 billion to shareholders.                      
Looking ahead, we are confident that Anglo American will deliver                
significant shareholder value as a focused mining Group. Anglo American"s       
strong growth prospects are underpinned by one of the industry"s strongest      
organic project pipelines and by our unique portfolio of world class            

The company also remains bullish about future prospects:

The outlook for most of our metals and minerals remains positive as growth      
in the OECD and China continues to underpin demand. While rising interest       
rates may moderate global growth somewhat from current robust levels, the       
improving economic outlook for Japan and Euroland and the continued             
strength in Asian economies, notably India and China, remains supportive.       
The supply side fundamentals for many metals have been impacted by              
unforeseen disruptions and slow project development with metal inventories      
in general remaining low or falling. Our project pipeline will continue to      
underpin the Group"s growth prospects and ensure material increases in          
production across our businesses.                                               
If metal prices remain at, or close to, current levels the Group will enjoy     
a strong second half.

Anglo’s results really are a great set of numbers and they have shown they have what it takes to become a global player in their business. While the PE ratio of just under 20 may be somewhat expensive, this juggernaught has certainly shown it means business. Definately worth a look when the price cools down!


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