Anglo records 4.6bn-dollar impairment charge for 2012

Anglo American was whacked by 4.6bn dollars of impairments in 2012, while underlying earnings took a hit from falling commodity prices, ongoing cost pressures and a loss-making platinum business.

Anglo American was whacked by 4.6bn dollars of impairments in 2012, while underlying earnings took a hit from falling commodity prices, ongoing cost pressures and a loss-making platinum business.

The company swung into the red in the 12 months to December 31st, recording a loss before tax of $239m, compared with a profit of $10,782m the year before.

The firm recorded impairments worth $4.6bn (post-tax) in relation to its Brazilian Minas-Rio project - which was found to need $8.8bn more in capital expenditure - and a number of platinum projects that were said to be "uneconomical".

In relation to the Minas-Rio project, Chief Executive Cynthia Carroll said: "Despite the difficulties we have faced that have caused a significant increase in capital expenditure, we continue to be confident of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project.

"The first phase of the project will begin its ramp-up at the end of 2014, with operating costs expected to be highly competitive in the first quartile of the FOB cash cost curve, generating significant free cashflow for many decades to come."

On an underlying basis, group earnings dropped by 54% from $6,120m to $2,839m. Underlying earnings per share fell from $5.06 to $2.26.

Meanwhile, revenues decreased by 10% from $36,548m to $32,785m as the company said that there was a decline in realised prices across the majority of commodities it produced.

Cautious optimismDespite the gloomy 2012 results, the company's outlook statement was a little more upbeat, as Carroll highlighted "a degree of renewed optimism to the economic prospects".

She said that while economies in Europe and Japan remain weak, "recent policy changes ought to stimulate growth in 2013".

"Alongside a continuing recovery in the US, we expect robust growth in the major emerging economies - especially China and India - as they benefit from continuing urbanisation. Rising living standards and an expanding middle class should support demand for our products across our diversified mix."

The company raised its final dividend per share (DPS) by 15% to 53 cents, bringing the total DPS to 85 cents, also up 15% year-on-year.

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