Xstrata H1 earnings drop, defers $1bn of spending
Anglo-Swiss miner Xstrata, in the throes of a $26bn (£16.7bn) takeover bid, posted a smaller-than-expected drop in profit despite the impact of weaker prices and reduced copper production, and announced plans to cut spending for the year.
Xstrata’s earnings before interest, tax, depreciation and amortisation (Ebitda) for the first six months of 2012 totalled just over $4bn. That compares with $5.8bn a year ago and a consensus of analyst forecasts of $3.87bn.
Its operating profit for the first six months of the year dropped 42 per cent to $2.45bn.
Xstrata, one of the world’s largest producers of thermal coal and copper, agreed earlier this year to be taken over by commodities trader 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.
The miner, which cut real unit costs by $105m, said it had reduced its planned spending for 2012 by $1bn, with $400m of that deferred into next year.