Xstrata posts $6bn profit as copper soars

 
Marion Dakers
MINER Xstrata beat expectations to more than quadruple its pre-tax profit in 2010, the firm said yesterday, on the back of a runaway rise in commodity prices.

Xstrata’s pre-tax profit rose to $6.6bn (£4.1bn) up from $1.53bn a year ago, on revenues that rose 34 per cent to $30.5bn.

Copper prices, which have jumped 30 per cent in the last 12 months, contributed $2.2bn to Xstrata’s $7.7bn operating profit, which was 75 per cent up on last year.

The firm unveiled a higher than expected dividend payment for the year, to 25 cents compared to eight cents a year ago, in a demonstration of the board’s confidence in its plans for the year.

Sanford Bernstein analyst Paul Galloway said the dividend “puts down a marker for cash return for other mining companies”.

Xstrata repeated its plans to increase overall production by 50 per cent before the end of 2014, and said it was on track to continue 20 new or expanding projects in 2011.

Xstrata said last week that thermal production had been hit by the flooding in Queensland, Australia, but chief executive Mick Davis said yesterday the outlook was less bleak. “As we stand at the moment we do not see any significant impact on 2011 results,” he said.

Mining rivals Rio Tinto and BHP Billiton are due to report results on the 10 and 16 February respectively.