LONDON Xstrata Plcs
first-half financial results were hit by lower commodity
prices, especially nickel and zinc, it said, noting that 2012
capital spending will be cut by $1 billion.
Operating profit attributable to
Zug, Switzerland-based Xstrata totaled $2.34 billion for the
six months ended June 30, down 42 percent from $4.04 billion in
the same year-ago period, on attributable revenue that fell 6.9
percent to $15.05 billion from $16.16 billion.
Lower prices were "the major
contributor to reduced profitability," chief executive officer
Michael "Mick" Davis said.
typically lag declining commodity prices, but we expect costs
to moderate over time as a number of capital projects are
delayed and lower commodity prices start to flow through to key
inputs," he said.
Like other major miners, Xstrata
is reviewing its spending plans amid uncertainty over the
global economy and commodities prices.
"Following a review of our
project pipeline, we have re-sequenced capital spending and
deferred $1 billion of expenditure originally planned for
2012," the miner said, now pegging 2012 capital spending at
"Our 2013 budgeted spending will
increase by $400 million, with $600 million deferred beyond
that, without affecting the commissioning schedule of any of
our approved projects," the company said.
Meanwhile, Xstrata Alloys
operating profit fell 54.8-percent to $52 million from $115
million in the same comparison, on revenue that declined 24.1
percent to $753 million from $992 million.
The lower revenue was due to a
fall in ferrochrome and platinum group metal prices, as well as
lower sales volumes.
"Our operations were impacted by
weak commodity demand, lower prices and double-digit inflation
in key industry inputs, including energy and raw materials,"
Rustenburg, South Africa-based Xstrata Alloys said.
Xstrata Alloys, like most major
ferrochrome producers, cut first-half capacity sharply and sold
the electricity it saved back to state power supplier Eskom
Holdings SOC Ltd. Ferrochrome output of 459,000 tonnes was down
21 percent from 581,000 tonnes a year earlier.
Ferrovanadium output fell 7
percent to 1.84 million kilograms from 1.98 million kilograms
in the same comparison due to increased vanadium pentoxide
demand from the aerospace industry, which left less available
for conversion to ferrovanadium, the company said.
Vanadium pentoxide output fell
1.5 percent to 9.95 million pounds during the period from 10.09
million pounds a year earlier.