Anglo American Full-Year Profits Plunge After Brazil Writedown
By Martin Baccardax | February 15, 2013 6:37 PM EST
Anglo American posted a full year pre-tax loss after the world's biggest platinum miner was forced to take a multi-billion dollar writedown on the value of a key project in Brazil.
Anglo said its full year loss for the 2012 financial year was $239m (€178.7m/£154m), compared to a $10.782bn pre-tax profit in 2011, the company said in a statement published on its website Friday. The loss attributable to shareholders in the year was $1.15bn, the company said, compared to a profit of $6.169bn in 2011. Group revenues fell 10 percent to $32.7bn while underlying profit fell 44 percent to $6.2bn.
"Anglo American continued its drive for strong operational performance throughout 2012 in an environment of tough macroeconomic headwinds and a number of industry-wide and company specific challenges," CEO Cynthia Carroll said in the statement. "Record volumes of metallurgical coal, achieving benchmark equipment performance levels, and of iron ore and increased volumes of export thermal coal and copper helped to offset the impact of illegal industrial action, declining grades and higher waste stripping."
Anglo raised its cost estimate for the Minas-Rio iron ore project for the sixth time last month, taking the most recent tally to $8.8bn. The original estimate was $2.6bn.
"We are clearly disappointed that the diversity of challenges that our Minas-Rio project has faced has contributed to a significant increase in capital expenditure, leading to the impairment we have recorded," said outgoing CEO Carroll on 29 January. "Despite the difficulties, we continue to be confident of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project."
Anglo's writedown came just two weeks after Tom Albanese was forced out as CEO of Rio Tinto after the world's second largest mining group announced a shock $14bn charge to the value of key mining assets - Rio Tinto Alcan and Pacific Aluminium - that he directed the company to purchase less than five years ago.
Anglo bought Minas Rio in 2007 under Carroll's plan to diversify the group's revenue base outside of its South African roots for around $5.5bn and expects further development costs to pass $8bn.
Carroll, who served as CEO for just over five years and was both the first woman and the first non-South African to head the group, will be replaced by former AngloGold Ashanti CEO Mark Cutifani on 3 April as it struggles to hold costs in check in Brazil and navigate increasingly complicated labour relations in South Africa.
Anglo American shares rose 2 percent in early London trading to change hands at 2,057.0 pence each.
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