Xstrata profits surge by 30pc

City A.M. Reporter
Xstrata came broadly in line with forecasts with a 30 per cent jump in first-half core profit and more than doubled its dividend, pointing to a stronger second half as its copper unit helps the miner recover from a flood-hit start to 2011.

The fourth-largest UK-listed diversified miner - which last week unveiled production numbers for the first six months broadly in line with forecasts - said earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $5.82 billion (3.56 billion pounds), broadly in line with forecasts.

Its operating profit rose 31 per cent to $4.25bn, while attributable profit came in at $2.9bn, up 25 per cent. Earnings per share rose 24 per cent to $0.98.

The group more than doubled its interim dividend, however, to $0.13 from $0.05 a year ago.

"In summary, we delivered robust earnings despite a number of one-off impacts to our operations in the early part of the year," said Chief Executive Mick Davis. "Our recovery has been swift and robust and we are now operating with good momentum to deliver a substantially stronger second half."

Copper, the price of which climbed more than 30 per cent in the first half, accounted for 50 percent of Xstrata's operating profit in 2010.

Xstrata pointed to rising costs across the industry, as it is hit by a jump in diesel prices, increasing energy costs in South Africa and rising wages across producer nations. But the miner said it had achieved $52m of real unit cost savings.