Xstrata's First-Half Profit Triples on Metal Prices

NEWYORK, Aug. 4 -- Xstrata Plc, the largest exporter of coal used for power, said first-half profit more than tripled after metal and coking coal prices jumped from a year earlier.

Net income rose to $2.3 billion from $690 million a year before, the Zug, Switzerland-based company said in a statement today. That beat the $2.1 billion average estimate of five analysts surveyed by Bloomberg. Sales advanced 43 percent to $13.7 billion.

Chief Executive Officer Mick Davis is spending $14 billion to expand output 50 percent by 2014, betting on a sustained revival in metal and coal demand as the global economy recovers from last year's recession. Metal prices were on average 66 percent higher in the first-half than a year earlier, according to a measure of six metals on the London Metal Exchange.

"From a growth point of view we are relatively confident that we moved out of the recession," Davis said by phone today from London. "We don't have the same fears that of double-dips as many people in the market. The U.S. is in a solid recovery and I think that's obviously very important because that will bolster and assist exports from China."

Xstrata fell 3 pence, or 0.3 percent, to 1,072 pence at the 4:30 p.m. close in London. The company said it will pay an interim dividend of 5 cents a share.

Operating profit excluding exceptional items doubled to $3.2 billion, Xstrata said. The company is on schedule to meet the targeted 50 percent jump in output by 2014 after approving $8 billion in new projects in the first half, it said.

Xstrata today approved the $4.2 billion Las Bambas copper project in southern Peru and the $1.1 billion Ulan West coal venture in Australia, the company said in separate statements.

Last month, Xstrata approved investment of $1.5 billion to develop the Antapaccay copper mine in Peru.