* 2013 operating profit up 6 pct, beats forecast
* 2nd consecutive annual net loss after $1.9 bln writedown
* Platinum business hurt by strikes
* Debt expected to peak in 2015
By Silvia Antonioli
LONDON, Feb 14 Global miner Anglo American
said an overhaul of its business should gather pace in
the next two years after initial improvements at its copper and
iron ore mines helped annual operating profit beat forecasts.
However, a $1.9 billion impairment charge related mainly to
its Barro Alto nickel business in Brazil and its strike-hit
platinum division in South Africa, meant Anglo, the smallest of
the major diversified miners, made its second consecutive annual
net loss last year.
After years of sector-lagging returns, Anglo has embarked on
an initiative to improve the operation of major mines under
Chief Executive Mark Cutifani, who joined the company less than
a year ago.
Cutifani said on Friday that most of the improvements were
still to come.
"As we go into 2015-2016 we expect a continuing improvement
and will start to really step up the plate with the
commissioning of some of the new production and a turnaround
that is going on at Kumba," Cutifani said, referring to
the company's South African iron ore division.
He warned more strikes in South Africa and a rising supply
of metals such as iron and copper weighing on prices were risks
for the current year.
Anglo reported a 6 percent rise in 2013 underlying operating
profit to $6.6 billion, ahead of a $5.6 billion Thomson Reuters
I/B/E/S analysts' forecast and a consensus forecast provided by
the company of $6.3 billion. The net loss narrowed to $961
million compared with a $1.5 billion loss in 2012.
Price declines for many of the commodities Anglo produces
were offset by higher output.
Last month Anglo reported a rise in fourth-quarter output of
all its main metals, a sign efforts to improve performance at
its mines are starting to pay off.
A weaker South African rand also helped, as Kumba and
Anglo's other operations in South Africa pay their costs in rand
but sell their products in dollars.
"The robust fourth-quarter production results followed by
strong financial performance increases our confidence in
efficiency measures taken by the company," Citi analysts said in
a note to clients.
"However we think the company's balance sheet remains under
pressure," the analysts said.
Anglo's net debt rose to $10.7 billion at the end of
December from $8.5 billion a year earlier and Anglo forecast it
would peak in 2015 at around $15-16 billion.
The company's spending is expected to peak this year at
$7.0-7.5 billion from $6.3 billion in 2013, mainly due to the
costs of its Grosvenor coking coal project in Australia and the
large Minas Rio iron ore project in Brazil.
The $8.8 billion Minas Rio has been a sore spot, due to
delays and cost overruns, but Anglo said it was now 85 percent
complete and on track to deliver its first iron ore shipment by
the end of this year.
Shares in Anglo American, which have gained 20 percent in
the last month, were down 1.3 percent by 1557 GMT on Friday.
SOUTH AFRICA STRIKES
Anglo American's iron ore division Kumba, by far the
largest contributor to group profit, posted a 24 percent jump in
underlying full-year earnings earlier this week.
That was a sharp recovery from a wave of illegal strikes
which hit Kumba and South Africa's mining sector in 2012.
However industrial action, particularly related to platinum,
remains a concern.
Anglo's platinum division Amplats, the world's
largest producer of the precious metal, swung back to profit in
2013 but its recovery is threatened by new labour
Anglo is hammering out a restructuring plan for Amplats,
which includes mothballing unprofitable plants and cutting
thousands of jobs.
Members of South Africa's AMCU union have said they will
continue with a wage strike that has hit output at the world's
three biggest platinum producers until employers meet their
Anglo, grappling with rising costs, lower prices and
declining productivity, argues that accepting the hefty salary
increases demanded by the union would make its business
Operating profit at Anglo's majority-owned diamond miner De
Beers rose 112 percent as output increased.