UPDATE 2-Xstrata Year Profit Up 86 Pct, Outlook Positive-Shanghai Metals Market

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UPDATE 2-Xstrata Year Profit Up 86 Pct, Outlook Positive

Industry News 01:36:15PM Feb 09, 2011 Source:SMM

LONDON, Feb 8 (Reuters) - Miner Xstrata (XTA.L: Quote) beat forecasts with an 86 percent jump in full-year profit on stronger commodity prices, and gave a positive outlook for 2011.

The Anglo-Swiss miner said it was still assessing the impact from the flooding and cyclones in Queensland where it has coal, copper and zinc operations, after it was forced to close mines in the Australian state.

"As we stand at the moment we do not see any significant impact on 2011 results," chief executive Mick Davis told Reuters on Tuesday.

Xstrata, the fifth-biggest diversified miner by market capitalisation, said the full impact would partly depend on the speed of recovery in infrastructure and on future rainfall, adding spot prices had risen in response to the supply constraints.

Attributable profit, excluding exceptional items, for 2010 surged to $5.15 billion, beating the $5.05 billion consensus of 18 analysts provided by the company.

Xstrata reduced its gearing to 15 percent from 26 percent and cut net debt 38 percent to $7.6 billion.

"Overall, a solid set of numbers with growth supported by a strong balance sheet," said Credit Suisse in a note.

Xstrata shares were down 1.2 percent at 1205 GMT, outperforming a 1.7 percent lower STOXX Europe 600 Basic Resources . The miner, typically one of the most heavily traded companies in London, set its final dividend at 20 cents, reflecting a return to pre-crisis levels and plans to continue a progressive dividend policy.

Paul Galloway, analyst at Sanford Bernstein, said the dividend was significantly higher than expected "and puts down a marker for cash return for other mining companies".

Xstrata, the world's biggest producer of thermal coal, reported lower 2010 production for coal and a mixed performance for copper last week, although prices rose for most of its commodities. Copper and coal are the group's biggest earnings contributors.

GLENCORE

Davis said the company has had no indications from Glencore International [GLEN.UL], its biggest shareholder, on the specific timing of an initial public offering. "We do not have any greater insight than the market has," he said.

Glencore, the world's largest commodities trader and estimated to be worth about $60 billion, is seeking a $7-$8 billion dual listing as early as April, banking sources told International Financing Review in January.

Xstrata was said to be considering replacing chairman Willy Strothotte who also chairs Glencore, Sky News reported in January.

Davis said Xstrata's board was under a normal process of review and a Glencore IPO would obviously impact its board structure.

Xstrata was the first major diversified miner to post earnings this season. BHP Billiton (BLT.L: Quote) (BHP.AX: Quote) and Rio Tinto (RIO.L: Quote) (RIO.AX: Quote) will report results on Feb. 16 and Feb. 10 respectively.

The company issued a positive outlook as it continues with its organic growth programme. Xstrata has $14 billion in projects under construction as it aims to lift growth by 50 percent, from 2009 production levels, by 2014.

Davis said copper was the base metal going to have the most supply-side issues. Copper prices CMCU3 dipped on Tuesday but were still close to record highs.

Coal prices were also expected to perform strongly, especially in the first half in response to the flooding in Queensland, while energy demand was also likely to post strong growth, he said.
 

Key Words:  Xstrata 

UPDATE 2-Xstrata Year Profit Up 86 Pct, Outlook Positive

Industry News 01:36:15PM Feb 09, 2011 Source:SMM

LONDON, Feb 8 (Reuters) - Miner Xstrata (XTA.L: Quote) beat forecasts with an 86 percent jump in full-year profit on stronger commodity prices, and gave a positive outlook for 2011.

The Anglo-Swiss miner said it was still assessing the impact from the flooding and cyclones in Queensland where it has coal, copper and zinc operations, after it was forced to close mines in the Australian state.

"As we stand at the moment we do not see any significant impact on 2011 results," chief executive Mick Davis told Reuters on Tuesday.

Xstrata, the fifth-biggest diversified miner by market capitalisation, said the full impact would partly depend on the speed of recovery in infrastructure and on future rainfall, adding spot prices had risen in response to the supply constraints.

Attributable profit, excluding exceptional items, for 2010 surged to $5.15 billion, beating the $5.05 billion consensus of 18 analysts provided by the company.

Xstrata reduced its gearing to 15 percent from 26 percent and cut net debt 38 percent to $7.6 billion.

"Overall, a solid set of numbers with growth supported by a strong balance sheet," said Credit Suisse in a note.

Xstrata shares were down 1.2 percent at 1205 GMT, outperforming a 1.7 percent lower STOXX Europe 600 Basic Resources . The miner, typically one of the most heavily traded companies in London, set its final dividend at 20 cents, reflecting a return to pre-crisis levels and plans to continue a progressive dividend policy.

Paul Galloway, analyst at Sanford Bernstein, said the dividend was significantly higher than expected "and puts down a marker for cash return for other mining companies".

Xstrata, the world's biggest producer of thermal coal, reported lower 2010 production for coal and a mixed performance for copper last week, although prices rose for most of its commodities. Copper and coal are the group's biggest earnings contributors.

GLENCORE

Davis said the company has had no indications from Glencore International [GLEN.UL], its biggest shareholder, on the specific timing of an initial public offering. "We do not have any greater insight than the market has," he said.

Glencore, the world's largest commodities trader and estimated to be worth about $60 billion, is seeking a $7-$8 billion dual listing as early as April, banking sources told International Financing Review in January.

Xstrata was said to be considering replacing chairman Willy Strothotte who also chairs Glencore, Sky News reported in January.

Davis said Xstrata's board was under a normal process of review and a Glencore IPO would obviously impact its board structure.

Xstrata was the first major diversified miner to post earnings this season. BHP Billiton (BLT.L: Quote) (BHP.AX: Quote) and Rio Tinto (RIO.L: Quote) (RIO.AX: Quote) will report results on Feb. 16 and Feb. 10 respectively.

The company issued a positive outlook as it continues with its organic growth programme. Xstrata has $14 billion in projects under construction as it aims to lift growth by 50 percent, from 2009 production levels, by 2014.

Davis said copper was the base metal going to have the most supply-side issues. Copper prices CMCU3 dipped on Tuesday but were still close to record highs.

Coal prices were also expected to perform strongly, especially in the first half in response to the flooding in Queensland, while energy demand was also likely to post strong growth, he said.
 

Key Words:  Xstrata