Thursday, Eurasian Natural Resources Corp. Plc (ENRC.L) reported that its profit for the first half of fiscal 2008 more than tripled from last year, boosted by strong production, demand, and higher prices mainly in the Ferroalloys and Iron Ore divisions. Further, the company announced its maiden interim dividend, and said it expects very strong performance in the second half of 2008.
The diversified natural resources provider, with production assets mainly located in the Republic of Kazakhstan, reported net profit attributable to shareholders of US$1.34 billion compared to US$381 million last year. Earnings per share soared 173.7% to US$1.04 from last year's US$0.38.
Profit before tax for the period more than tripled to US$2.05 billion from US$586 million a year earlier.
For the six-month period, revenue was US$3.44 billion, up 85.5% from US$1.86 billion a year earlier. The underlying revenue growth was 69.3% largely reflecting higher realized sales prices.
Eurasian Natural attributed the improved results to strong demand across commodities and higher pricing mainly for ferrochrome and iron ore. The company also experienced continued strong macroeconomic growth in China and Russia.
Ferroalloys Division, which produces ferrochrome and other ferroalloys, generated revenues of US$2.11 billion, significantly higher than US$917 recorded a year ago. The division accounted for 75.2% of the total revenue growth primarily due to higher ferroalloys prices resulting from demand and supply concerns.
Iron Ore division's revenue grew to US$768 million from US$457 million a year ago, and accounted for 19.6% of the total revenue increase, mainly due to higher achieved iron ore prices and volumes.
The company also recorded revenue growth in Alumina & Aluminium, Energy, and Logistics divisions.
Operating profit margin was 58.1%, up from last year's 34.5%. EBITDA margin, before exceptional items, were 62.5%, compared to 42.9% a year ago.
Commenting on the results, Johannes Sittard, Chief Executive Officer, said, "The Group's record results are a testament to the strength and breadth of our businesses, our high quality assets, diversified revenue base and fully integrated energy and logistics capabilities. Whilst benefiting from strong commodity prices, we managed to contain costs across our operations."
Further, Eurasian Natural announced its maiden interim dividend of 12.00 US cents per share, or 6.44 pence per share, amounting to US$155 million. The dividend will be paid on November 19 to shareholders on the register at the close of business September 5.
Looking ahead, the company said it expects very strong performance from the Group in the second half of 2008, and further growth beyond. "Despite macroeconomic uncertainties, we expect higher commodity prices to hold", Sittard added.
That said, Eurasian Natural expects continued cost pressures, particularly in the core operating divisions, even though it achieved a good control of costs in the first half.
ENRC.L is currently trading at 1,068 pence, up 41 pence or 3.99%, on a volume of 874 thousand shares.
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