Commodity prices and rising costs push Xstrata profits down 37 per cent
Net income, excluding exceptional items, such as impairment charges, fell to $US3.65 billion from $US5.79 billion a year earlier, the company said. Sales at the world's largest exporter of power-station coal slid 7 per cent to $US31.6 billion.
"The combined impact of falling commodity prices, ongoing inflationary pressure on operating costs and continued strong producer currencies relative to the US dollar put pressure on our margins," chief executive officer Mick Davis said in the statement.
The average price for power-station coal at the Port of Newcastle, an Asian benchmark, dropped 19 per cent to $US90.65 a tonne in 2012, according to McCloskey Group data and copper slid 9.9 per cent. Xstrata's thermal coal production last year rose 7.2 per cent to 90.4 million tonnes, while copper output fell 16 per cent to 747,042 tonnes.
Xstrata, the fourth-largest producer of copper, began output at its $US1.5 billion Antapaccay project in southern Peru in November. It will produce an average of 160,000 tonnes per year in the first five years.
Xstrata's net income, including the exceptional items, plunged to $US1.18 billion from $US5.7 billion. The full-year dividend rose 14 per cent to US45.5¢ a share.
Frequently Asked Questions about this Article…
Xstrata said its 2012 profits fell largely because of weaker commodity prices, higher operating costs and strong producer currencies versus the US dollar. Excluding exceptional items, net income dropped to US$3.65 billion from US$5.79 billion a year earlier, and sales fell 7% to US$31.6 billion.
The company cited lower commodity prices as a key factor. The Asian benchmark price for power‑station coal at the Port of Newcastle fell 19% to US$90.65 a tonne in 2012, while copper prices slid about 9.9%. Those price moves put pressure on Xstrata’s margins and overall profitability.
Thermal coal production rose 7.2% to 90.4 million tonnes in 2012, but copper output fell 16% to 747,042 tonnes. So production trends varied by commodity, with higher coal volumes but lower copper volumes.
Yes. Even though profits fell, Xstrata increased its full‑year dividend by 14% to US45.5 cents a share, according to the company statement.
Xstrata started output at its US$1.5 billion Antapaccay project in southern Peru in November. The project is expected to produce an average of 160,000 tonnes per year during the first five years, supporting the company’s copper supply.
Including exceptional items, Xstrata’s net income plunged to US$1.18 billion in 2012 from US$5.7 billion the previous year, reflecting impairment charges and other one‑off items.
Yes. The article notes Xstrata plc was the subject of a US$33 billion takeover by Glencore International at the time of the reported results.
The 2012 results highlight how commodity price swings, rising operating costs and currency moves can significantly affect mining company profits. Investors should note production trends (higher coal output, lower copper output), the impact of one‑off items on reported earnings, and that Xstrata still raised its dividend despite weaker underlying earnings.
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