Anglo American, the mining group, warned of a difficult year ahead yesterday after posting an 11 per cent drop in underlying pre-tax profits for last year.
The global economic slowdown has seen metal prices sag, forcing pre-tax profits down from $3.8bn (£2.7bn) to $3.4bn last year, although including the proceeds from business disposals the figure rose to $5.1bn. Some $1bn of the disposal proceeds followed Anglo's move to eliminate a cross-holding between it and De Beers, the diamond company.
Low commodity prices were to a degree offset by the weakness of the rand and the Australian dollar, which depressed costs by about 30 per cent. However, base metal earnings fell to just $2m, against $173m in 2000. Platinum metals earnings were up $22m at $500m. However, earnings from coal remained strong, almost doubling to $271m.
Tony Trahar, the chief executive, warned that the majority of Anglo's operations were in for another tough year. "While there are some signs of economic recovery, at this stage they seem more encouraging in the United States than in Europe and Japan," he said. "The trading environment for most of our products is likely to remain challenging."
Anglo suffered an exceptional charge of $488m relating to its troubled Zambian copper mines, which the group said may soon be treated as a discontinued operation.
The company, which hiked its dividend 3 per cent, said it would be happy doubling its borrowings to fund acquisitions that would allow it to better exploit any upturn in economic activity. It has already increased its stake in Johannesburg-listed Anglo Platinum, the world's largest platinum producer, from 50.1 per cent to 59.6 per cent.
Anglo shares closed down 3.3 per cent, or 39p, at 1,152p.
Earlier this week Goran Lindahl, Anglo's chairman-designate, stood down following a dispute with his former employer, the engineering group ABB.Reuse content