Xstrata excavates a $5.12bn result
The Age
Wednesday February 9, 2011
ZUG-BASED Xstrata has kicked off the profit-reporting season in style for the world's big miners.Its profit for (calendar) 2010 soared 86 per cent from $US2.77 billion to $5.12 billion before exceptional items bang on market expectations.Rio Tinto follows with its profit report tomorrow, with the market expecting a bumper $US14 billion result, up from $US6.3 billion in 2009 when Rio and the rest of the industry was still carrying the scars of the global financial crisis.BHP Billiton, the world's biggest miner, will follow with its profit for the December half on February 16. An improvement from $US6.14 billion to $US10.5 billion for the half-year is expected.The dramatic recovery in commodity prices has increased pressure on the big miners to improve shareholder returns unless they have big acquisitions under way.Xstrata, which now has a focus on organic growth rather than growth by acquisitions, is to pay a final dividend of US20 a share, taking its annual payout to US25 a share, up from US8 a share for 2009.Increased dividends are also expected from Rio and BHP but, given the monster growth in their cash flows, additional capital management moves are expected. New share buybacks of more than $US5 billion from each are tipped.Xstrata chief executive Mick Davis was upbeat on the potential for boom conditions to continue. He said indicators suggested the US was finding a "reasonably solid track for recovery".Data for January for Europe's manufacturing and services industries has pointed to the fastest pace of expansion in nine months while China looks likely to achieve "wholly respectable high-single-digit growth rates in 2011," Mr Davis said. Xstrata was still assessing effect of the Queensland floods on its coal operations, he said.The sharp price rise in coking and thermal coals was nevertheless providing an offset to the lost production.
© 2011 The Age
