The shares rose 22p to 514p on the back of net attributable profits up 2.6 per cent at pounds 158m despite a flat turnover of pounds 2.3bn. The interim dividend was unchanged at 6p.
Tight cost control, with manpower down 3 per cent despite higher production, together with a pounds 12m fall in interest costs to pounds 16m, were largely responsible.
Robert Wilson, chief executive, said the cost savings and volume benefits of pounds 26m more than offset the pounds 25m cut in earnings from lower metal prices and a higher tax charge.
The outlook remains subdued, however, with world demand for metals and industrial products still weak. Mr Wilson said there had been no increase in demand in the first half and little expectation of any in the second.
'US revival has been very slow and uneven. Europe has seen virtually no growth and in Japan there has been a large decline in industrial production.'
Sir Derek Birkin, chairman, warned: 'Our expectations remain cautious. I do not anticipate that average metal prices or sales volumes of our products overall will improve materially until worldwide economic recovery becomes soundly based.'
Mining and metals operations contributed pounds 140m to earnings, slightly down on last year's pounds 148m. Metals have been depressed, with non-ferrous prices falling around 7 per cent in US dollar terms compared with the same period in 1991.
The pricing of most traded metals in dollars makes the company vulnerable to dollar weakness - first-half translation rates of dollars 1.79 to the pound are unlikely to be repeated in the second period. But Christopher Bull, finance director, said the impact should not be exaggerated.
A first-half depreciation in the dollar of 10 per cent might have cost the company pounds 50m, he observed. But it would probably have been balanced by gains of pounds 17m from a corresponding fall in the Australian dollar and pounds 18m from a 5 per cent rise in dollar-traded metal prices. The net effect would thus only have been around pounds 15m. There would also have been a benefit in terms of lower US dollar-denominated debt. 'This company is the largest mining company in the world, has the lowest costs, the widest spread of products, the strongest capital flows, the largest capital expenditure and the only AA-rated balance sheet,' Robert Davies of Shearson Lehman said.
With net debt down from 27 per cent to 25 per cent, it stood out from other groups, he added. BHP's gearing, not one of the worst, was 100 per cent.Reuse content