Anglo American’s Annual Profit Exceeds Estimates, Assessing Platinum Unit

Anglo American Plc (AAL), a producer of metals and minerals from Africa to Brazil, said 2011 profit climbed 23 percent, beating estimates, and that it is considering changes to its platinum unit to restore returns.

Underlying earnings climbed to a record $6.12 billion, or $5.06 a share, from $4.98 billion, or $4.13 a share, the London- based company said today in a statement. That compares with the $4.67 median estimate of 23 analysts surveyed by Bloomberg News. Anglo will pay a dividend of 46 cents a share, compared with Bloomberg’s forecast of 44 cents.

Chief Executive Officer Cynthia Carroll, like her rivals at BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO), is expanding iron-ore, copper and coal mines to tap growing Asian demand. Anglo may spend $98 billion on more than 85 projects to double production, Carroll said today, without giving a period.

“Tempering exuberance, the beat is due to lower-than- expected depreciation and tax charges,” Liberum Capital Ltd. said in a note today, referring to adjusted earnings.

Anglo rose for the first time in four days, gaining 1.1 percent to close at 2,674 pence in London. BHP, the biggest mining company, declined 0.8 percent while Xstrata Plc (XTA) increased 1.6 percent.

‘Size and Shape’

Anglo American Platinum Ltd., the world’s largest producer of the metal, earlier this week cut its 2012 output target and put a freeze on employment after annual profit slid 64 percent to 3.59 billion rand ($463 million) and as Europe’s debt crisis weighs on metal prices. Returns at Anglo American Platinum are not in keeping with the levels Anglo expects, Carroll told reporters on a conference call.

“We are looking at the size and the shape of the platinum business and how we can fundamentally shift it and return it to the sort of returns we had in 2008,” she said. Anglo should look at “how much we should be recycling, how much we should be driving the downstream part.” It won’t make decisions on this until the “latter part” of the year, she said.

Anglo will assess unprofitable mines or examine the “configuration” of the business, she told investors.

Anglo owns about 77 percent of Anglo American Platinum. (AMS) It also has 45 percent of De Beers and has offered $5.1 billion to boost its stake in the diamond miner to as much as 85 percent.

Platinum and diamonds are part of the so-called late-cycle commodities that set Anglo apart from its rivals. Their price movements typically lag behind other commodities and can bridge profit at times when other prices fall.

Codelco Dispute

Glencore International Plc (GLEN)’s 23.5 billion-pound ($37 billion) bid for Xstrata, announced Feb. 7 was no surprise, Carroll told Bloomberg Television. “It really doesn’t change anything from a competitive standpoint,” she said. Asked if Anglo wished to remain independent, Carroll said the company had “the scale, and we’ve got the most balanced and diversified portfolio in the industry,” with 150,000 people in 30 countries.

The company has “reached out” to resolve a dispute over ownership of its Chilean copper unit, Carroll told reporters on the call today. Anglo has not been able “to reach a settlement with Codelco that takes into account Anglo’s strong legal position,” Carroll told investors in London.

Talks broke down between the two sides on Jan. 31, Santiago-based La Tercera said Feb. 14, citing Diego Hernandez, the CEO of state-owned Codelco.

Future Growth

Carroll doesn’t see the dispute hindering future growth in Chile, the world’s largest copper-producing nation, she told investors.

Anglo may complete non-core disposals, which have seen it selling businesses from sugar to paper, with the sale of its Scaw steel business in South Africa this year, Carroll said on the call with reporters.

Analysts that track Anglo American use underlying earnings, excluding special items and “re-measurements” that include some currency gains and losses, to assess performance.

Second-half adjusted earnings rose 8.3 percent to $2.48 a share from $2.29 a year earlier, Anglo said in an e-mailed statement. The company’s annual net income fell 6 percent to $6.17 billion from $6.54 billion.

“This result is in line or marginally below -- adjusting for one-offs -- expectations at the operating profit level but the total result is better than expectations on a lower tax rate” of 28.3 percent from 31.9 percent, Deutsche Bank AG analysts wrote in a note.

To contact the reporter on this story: Carli Cooke in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.