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Anglo American's Underlying Earnings Climb On Higher Commodity Prices

British miner Anglo American Plc (AAL.L,AAUKY.PK) reported Friday a 23 percent increase in underlying earnings for 2011, helped by higher coal prices.

Looking ahead, the company expects short-term uncertainty to persist in the global economy, particularly in Europe, but said longer term outlook for its commodities remains strong.

"We expect sustained growth in the emerging economies, notably in China and India, which will underpin robust demand for commodities, supplemented by early recovery signs in the US," said Chief Executive Cynthia Carroll.

In the year 2011, Anglo American's operations were impacted by a number of challenges, most notably weather disruptions in Queensland, Chile and southern Africa.

Iron ore production from a key mine of Kumba Iron Ore - the largest miner in Africa majority owned by Anglo, decreased 6 percent due to wet weather. Copper production dropped 4 percent, while nickel production increased 44 percent.

Realized prices increased across all major commodities, mainly export metallurgical coal and South African export thermal coal, driving the bottom line. Operating profit climbed 14 percent and EBITDA rose 11 percent.

The company noted it has reduced its net debt by $6.01 billion since the end of 2010 to $1.37 billion. The decrease reflects strong operating cash flows and proceeds on the disposal of 24.5 percent of its Chilean unit Anglo American Sur SA.

Anglo has recommended a 15 percent increase in final dividend, bringing total dividend for the year to $0.74 per share, a 14 percent increase.

Anglo noted today that the litigation with Chilean state-owned Codelco is ongoing. The companies have locked horn regarding an option agreement. In January, Codelco filed a lawsuit asking a Chilean Court to enforce Anglo to hand over 49 percent stake in Anglo American Sur. In November last, Anglo off-loaded a 24.5 percent stake in its Anglo Sur copper business to Mitsubishi Corp.

For fiscal 2011, Anglo American's pre-tax profit edged down 1 percent to $10.78 billion from $10.93 billion a year earlier. Attributable profit declined 6 percent to $6.17 billion or $5.10 per share.

For the year, special items and remeasurements, including associates, amounted to after-tax gain of $49 million, while prior year's gain was $1.57 billion mainly from disposals.

Underlying earnings, excluding one-time items, were $6.12 billion or $5.06 per share, up 23 percent from $4.98 billion or $4.13 per share in 2010.

Group revenue including associates for the full year increased 11 percent to $36.55 billion from $32.93 billion in the comparable period.

In London, Anglo American shares are currently trading at 2,681 pence, up 37 pence or 1.40 percent.

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by RTT Staff Writer

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