EARNINGS PREVIEW: Miners 1st Half Pfts Seen Down, Outlook In Focus
July 23 2009 - 7:10AM
Dow Jones News
TAKING THE PULSE: U.K.-listed miners are expected to report
sharp year-on-year declines in profits and revenue for the first
six months of the year as they absorb the impact of weaker
commodity prices.
"It's going to be a fairly tough reporting period for most,"
says Canaccord Adams analyst Damien Hackett.
Investors are keen to see how much cost savings miners have been
able to wring out of the downturn, the strength of balance sheets,
the impact of a weaker dollar and outlook on demand for key
earnings drivers such as copper and iron ore.
Spot prices have rebounded through the first half of the year,
but most companies remain cautious on underlying demand.
The market is looking for "any vision or clarity on what's going
on as far as metals demand is concerned," says Evolution Securities
analyst Charles Kernot.
Anglo American PLC's (AAUK) half-year report will garner special
attention, with analysts expecting it to make its case as a
stand-alone company in light of Xstrata PLC's (XTA.LN) unwanted
"merger of equals" proposal.
COMPANIES TO WATCH:
Anglo American PLC (AAUK) - 1H 09 July 31
MARKET EXPECTATIONS: Anglo American is expected to report
full-year operating profit at $1.94 billion, down 68.6% from $6.18
billion a year earlier, and earnings per share at 81 cents, down
77.2% from 356 cents, according to a company survey of 11
analysts.
MAIN FOCUS: Since Anglo's board rebuffed Xstrata's "merger of
equals" proposal, analysts say it now has to deliver adequate
performance to maintain shareholder support for independence - with
particular focus on early reports from Anglo Platinum Ltd. (AMS.JO)
and De Beers units. "We believe management's battle will be lost or
won within Amplats and De Beers - earnings are expected to have
been decimated in these historic breadwinners," says Liberum
Capital.
Xstrata PLC (XTA.LN) - 1H 09 Aug. 4
MAIN FOCUS: Xstrata's half-year report will largely be viewed
through the lens of its approach to Anglo American. "They're going
to want to emphasize how good they are at cutting costs. They'll
want to show they are better at that" than Anglo American,
Evolution Securities' Kernot says.
BHP Billiton Ltd (BHP) - FY 09 Aug. 12
MAIN FOCUS: BHP Billiton cruised through the market downturn in
the best shape out of any of the big, London-listed miners, but has
remained cautious on outlook.
Analysts are looking for the company's comments on underlying
demand, and its plans to deploy a strong balance sheet. "They are
in the driver's seat. I do think they can shed light on cash
returns (to investors) and selective M&A," says an analyst.
Rio Tinto PLC (RTP) - 1H 09 Aug. 18
MAIN FOCUS: Analysts are looking for a shift in Rio Tinto's
strategy following a $15.2 billion rights issue to repair its
heavily indebted balance sheet. "What are divestment priorities,
will they reignite capex," asks one analyst.
The market also will continue to focus on potentially
loss-making aluminum divisions, and the company's view on iron ore
pricing.
-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347;
jeffrey.sparshott@dowjones.com