Xstrata Interim Results for the 6 months ended 30 June 2008
August 06, 2008 | by Xstrata
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August 06, 2008, Mick Davis, Chief Executive Xstrata plc commented: “Xstrata’s operations delivered a solid performance in a highly challenging operating environment in the first half of 2008, recording underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.7 billion, in line with the prior period. Cost control remains a key strength and differentiator for Xstrata and I am delighted that despite unprecedented cost pressures, in particular in respect of energy and oil-linked costs, Xstrata’s commodity businesses achieved real unit cost savings of $166 million. As a result of Xstrata’s cost savings, our commodity businesses mitigated the full impact of mining sector and CPI inflation and contained cost increases to 9% in the first half.
“Strong operational cash flows of $4.4 billion financed increased capital expenditure of $1.5 billion to progress a broad range of organic growth projects across each of the commodity businesses. In total, Xstrata’s organic growth pipeline represents over $37 billion of growth projects. The successful realisation of this portfolio will deliver double-digit compound annual growth in coal, copper, platinum and nickel volumes over the next five years.
“Our proposed offer for Lonmin, the world’s third largest platinum producer, reflects our long-stated ambition to become a significant platinum producer and follows the development of the Mototolo platinum mine, the acquisition of Eland completed in October last year and today’s announcement of a new development joint venture with Nkwe.
“Xstrata’s strong exposure to significantly improved thermal, semi-soft and coking coal prices, higher third quarter ferrochrome prices and the continued robust outlook for copper, together with higher grades, improved volumes and new lower cost production from a number of new coal, copper, nickel and zinc operations all position the Group well to enjoy margin expansion and improved profitability from the second half of 2008 and into 2009.”
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Source: Xstrata, Press release