ENRC dodges governance questions as it reports an increase in half year profits

EURASIAN Natural Resources Corp (ENRC) reported a surge in half year profits yesterday, but faced criticism after it gave little information regarding its corporate governance review that has been going on since June.

The Kazakh miner reported a 33 per cent rise in pre-tax profits to $1.6bn on revenues that increased by 32 per cent to $4bn. Net income jumped to $1.17bn from $902m a year earlier.

But ENRC made no reference to its corporate governance issues, which sparked one the city’s most notorious governance rows that saw several of its directors, including city veteran Sir Richard Sykes, voted off the board in June this year.

Chief executive Felix Vulis said the corporate governance review was “well underway”, with a report due out in September.

“We are confident that the review will result in the right Board needed to lead the Group through its next growth phase,” he added.

ENRC, which producer ferroalloys, used in steelmaking, said profits were buoyed by rising demand from Asia’s car, appliance and building industries.

The company warned however, that the group’s performance would grow “at a slower rate than in the first” half due to volatile commodity prices.

“All in all, consumption will shake off this nervousness, but generally the risk that any uptick will be delayed is greater now than it was a couple of weeks ago,” chief commercial officer Jim Cochrane said.

ENRC rose 23.5p, or 3.7 per cent, to 655p at close of trading.

“It was a good set of numbers,” Cailey Barker at brokerage Numis said.

“The second half ... will probably be weaker, but the business as it stands is doing very well and once they get the permits for Brazil they will be into a different league.”

Escalating costs – from rising wages to energy – have blunted the positive effect of robust metals prices across the industry.