ANALYST VIEWS: WHAT DOES THIS MEAN FOR XSTRATA?

 
Steve Dinneen
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DAVID BUIK | BGC PARTNERS
"These results are up 300 per cent on last year. It is a staggering achievement to deliver figures this robust. It shows how much demand for coal has increased in China. This is leading the firm’s push and will continue to be a strong driver for growth into the future. The results are also a strong statement of how healthy the sector is at the moment, with Anglo also performing very well. I expect these firms to continue to perform and the outlook looks good."

CHARLES KERNOT | EVOLUTION
"Xstrata generated coal revenues around £226m better than anticipated and this largely flowed through to the bottom line leaving net earnings at £1.44bn against our £1.25bn forecast. Our concern about Xstrata’s coal performance proved unfounded. These are a good set of results. It is, however, all about growth and the company makes a big play of its £8.77bn pipeline – but we think Anglo has more growth and cost-cutting opportunities hence it remains our preferred stock."

TOM GIDLEY-KITCHIN | CHARLES STANLEY
"The interesting thing about these results is that they show a marked change in strategy for Xstrata. Back in February, when the firm released its preliminary results, it focused on organic growth and not mergers and acquisitions, where there were limited opportunities. However, management has now made it clear that it will give a higher profile to M&A again going forward. It seems highly likely that Xstrata will try to increase its stake in Glencore, which will make the company an unusual entity in the sector as both a producer and a major trader with a global reach."