Xstrata records 102% increase in operating profits

Xstrata more than doubled its operating profits for the first half of this year compared to the corresponding period in 2009.

Xstrata more than doubled its operating profits for the first half of this year compared to the corresponding period in 2009. 

The company reported a profit of $3.24 billion, up 102% from the $1.61 billion recorded in the first six months of last year. 

Revenue also increased 43% from $9.54 billion to $13.61 billion, while attributable profits rose 153% from $909 million to $2.3 billion.

The company said it delivered real cost savings of $243 million, as well as increased volumes of ferrochrome, PGMs, coking and semi-soft coal, refined nickel and mined zinc.

The miner’s net debt and gearing had reduced to $8.4 billion to 19% respectively by the end of June. 

The company also said it was on track to deliver a 50% increase in volumes and a 20% cost reduction through its “organic growth pipeline” by 2014. 

“Xstrata’s first half performance was characterised by another robust cost performance, volume growth in most key commodities and positive momentum in developing our industry-leading pipeline of organic growth projects,” the company’s chief executive Mick Davis said. 

“In total, 15 major growth projects are now approved and in the construction phase, representing a total of $14 billion of capital investment.

“These projects alone will deliver substantially all of our expected 50% increase in overall volumes by 2014.

“All of our projects remain on track and within budget and I am very pleased with the progress our teams are making from a technical, social and environmental point of view.”

Davis said he was confident the “buoyant outlook” for Xstrata’s commodities would hold in the medium-term. 

“The short term outlook for macro-economic conditions remains mixed, with a ‘three-speed’ global economy likely to persist for the foreseeable future,” he said. 

“With the exception of Germany, the European Union is likely to struggle for some time to reach historical growth rates.

“The US is likely to continue to provide an important base of demand for exports from developing countries and directly for commodities as its economic recovery continues. 

“However the developing economies, led by China, Brazil and India, are set to continue to provide the main driver of demand growth for our products.

“I remain very confident that Xstrata’s industry-leading growth prospects, attractive commodity mix and proven ability to realise value from the optimisation of our existing portfolio position the Group to deliver superior returns to its shareholders.” 

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