Anglo plans US$4 billion buyback

6 August 2007
Anglo American Plc said first-half profit rose to a record and announced plans to buy back US$4 billion of its stock after the price of platinum and metals needed by China gained.

Net income rose to US$3.38 billion, or US$2.41 a share, in the six months to June 30, from US$2.94 billion, or US$2/share, a year earlier, the company said in a statement. Underlying earnings per share were US$2.18, compared with the US$2.22 median estimate of four analysts surveyed by Bloomberg.

Chief executive Cynthia Carroll is presenting her first results after taking over on March 1. Since joining from Alcan Inc, she has announced plans to invest US$2.58 billion in Brazilian iron ore mines and an Alaskan copper project.

Anglo Platinum chief executive Ralph Havenstein resigned this week amid criticism by Carroll of the unit`s safety record.

``You get the sense that she is a woman with a mission and she is going to shake the cages in all areas,`` Matt Brenzel, who helps manage the equivalent of US$7.1 billion at Cadiz African Harvest Asset Management, said in a July 31 interview from Cape Town.

The share buyback for this year adds to the $3 billion plan announced last year, a programme that Anglo said is 61% complete. Shares of London-based Anglo rose 104 pence, or 3.8%, to £28.73 (US58.49) as of 8:03 a.m. local time, giving the company a market value of £38.2 billion.

At Thursday`s close, Anglo American`s shares had climbed 76% since former chief executive Tony Trahar said on Oct 26, 2005, that the company will focus on mining the metals that China`s economy needs. That beat the 75% return from the shares of bigger rival, BHP Billiton Ltd, and the 60% gain in the stock of Rio Tinto Group.

Rio, the world`s third-largest mining company, yesterday reported a 14% drop in first-half profit to US$3.25 billion after Australian coal sales and copper output declined. Anglo`s profit rose as the price of platinum, copper and nickel advanced.

The company owns 75% of South Africa`s Anglo Platinum, the world`s biggest producer of the metal, and copper mines in Chile.

The price of platinum averaged 11% higher in the period while the price of nickel more than doubled. Anglo American is focusing on industrial metals as the booming economies of China and India fuel demand for the raw materials needed for buildings, cars and appliances.