We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedChange Management

Xstrata posts 31 percent profits fall


But the fall was less than expected as the miner cut costs to offset weaker prices and reduced production

Article comments

Xstrata recorded a 31 percent slump in profits for its first six months, but only slightly lower than expected as the miner cut costs to offset weaker prices and reduced production.

The Anglo-Swiss miner, currently undergoing a $26 billion takeover bid from FTSE 100 commodities trader Glencore, took a $514 million hit to write down the value of its almost 25 percent stake in platinum miner Lonmin.

Lohmin has been battered along with the rest of the South African-focused sector by rising costs, weak demand and stoppages.

Xstrata, one of the world's largest producers of thermal coal and copper, agreed earlier this year to be taken over by Glencore, its largest shareholder. But the deal hit trouble in June after the miner's second-largest shareholder, Qatar Holdings, demanded an improved offer.

Xstrata's results had been keenly anticipated for signs of worsening profitability or a deteriorating outlook that could strengthen Glencore's case for keeping the offer as it is - 2.8 new shares for every share.

Analysts see Xstrata's ability to control the cost of producing a tonne of copper or coal as key to its prospects, as the industry battles stubbornly high wages and energy prices.

Xstrata is known for its tight rein on spending, having cut costs at every reporting period since its listing. It said on Tuesday it had lowered unit costs in real terms by $105 million, a drop led by its energy-consuming nickel and zinc arms. Over the year, it plans $390 million of cost savings.

CEO Mick Davis declined to comment on the potential outcome of the Glencore takeover ahead of a shareholder vote scheduled for 7 September, but said Xstrata would not suffer if it was left as a standalone company with two major investors - Glencore and Qatar.

photo credit: Reuters

Share:

Recommended Articles

Comments

Xstrata posts 31 percent profits fall
Change Management

How new technologies are 'disrupting' shared services

How new technologies are 'disrupting' shared services

A whole new model with less staff, more focus on intellectual capabilities and localised staffing is evolvingmore ..


Big increase in UK online sales tracked by IMRG Capgemini

Estimated £8.1 billion spent onlinemore ..

BHP Billiton names CFO Graham Kerr boss of new demerger business

BHP Billiton announced plans to separate its main business to simplify the group and boost shareholder valuemore ..

Online retailers to benefit from superfast broadband

Government hopes that 95 percent of the population will have superfast broadband by 2017more ..

Car industry’s greatest challenge is the shift to software

BMW’s outage illustrates the minefield manufacturers are navigating in light of the connected carmore ..

Is the FTSE 350 hiding behind token women appointments?

There are just 16 female executives in the first five FTSE 100 companies and technology firms fare even worsemore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..

Advertisement

* *