1. Financial Highlights for H1 2012
Financial performance impacted predominantly by a decline in commodity prices and a challenging economic environment
Revenue decreased 19% to USD 3,246 million
Cost of sales up 4% to USD 1,757 million, driven by increased inflation, increased depreciation and higher wage rates
Underlying EBITDA fell 41% to USD 1,144 million; Underlying EBITDA margin of 35%
Earnings per share down 60% to US 36 cents
Dividend of US 6.5 cents per share; payout ratio of 18% maintained
Gross available funds of USD 1,565 million; borrowings of USD 4.940 million. USD 3.0 billion of additional facilities obtained since the start of 2012 to fund growth projects.
2. Business Highlights for H1 2012
Sustained good demand for key products
Cost control and productivity enhancing initiatives helped to keep unit costs for key products below expectations
Capital expenditure of USD 1.047 million; focus on development of key strategic projects, notably the new Aktobe ferroalloys plant, anode plant. Power Unit 6 at EEC and the expansion of logistics capacity
Continued progress in Africa: material increases in copper production; agreement reached with First Quantum Minerals to acquire its DRC copper assets; post period granting of the new licence for the Frontier copper mine in the DRC
Acquisition of all outstanding shares in Shubarkol completed, strengthening portfolio of Tier 1 assets and providing synergies to our core businesses in Kazakhstan.
3. Outlook for Full Year 2012
Capital expenditure reduced to USD 2.4 billion for 2012; overall capex program in advanced stages of review to reprioritize investment spend; comprised of total committed expansionary capex of USD 2.3 billion and capex under review of USD 8.8 billion
Production expected to be at full available capacity across all Divisions in H2 2012; increased copper volumes expected, as well as recoveries in iron ore and alumina volumes
Volatile market environment and pricing uncertainty to persist, but competitive advantage of low cost position in Kazakhstan to be maintained
Industry cost pressures to continue, albeit at a slightly lower level than previously guided. Social spend to be maintained at approximately 2011 levels
On going assessment of options to best unlock value for shareholders, including demerging of the international operations of the Group
Summary Group Financial Information (Unaudited):
| H1 '12 | H1 '11 | YoY | |
| Revenue | 3,246 | 4,011 | -19.1% |
| Cost of sales | -1,757 | -1,690 | 4.0% |
| Gross profit | 1,489 | 2,321 | -35.8% |
| Operating profit | 800 | 1,667 | -52.0% |
| Profit before income tax | 667 | 1,631 | -59.1% |
| Income tax expense | -212 | -449 | -52.8% |
| Effective tax rate % | 31.8% | 27.5% | |
| Profit for the period | 455 | 1,182 | -61.5% |
| Profit attributable to equity holders of the company | 463 | 1,166 | -60.3% |
| Earnings per share - basic and diluted (US cents) | 36 | 91 | -60.5% |
| Interim dividend per share (US cents) | 6.5 | 16 | -59.4% |
| Total depreciation, amortization and impairment | -324 | -260 | 24.6% |
| Loss arising related to acquisition of associate | -14 | - | 100.0% |
| Acquisition related costs | -6 | - | 100.0% |
| Total costs | -2,446 | -2,344 | 4.4% |
In millions of USD (unless otherwise stated)
Mr Felix J Vulis CEO of ENRC said that "ENRC has shown a resilient performance in the first half of 2012, a period characterized by deepening economic uncertainty and declining prices for our key products. In the light of these market conditions we have concentrated on controlling our costs and enhancing productivity, with unit cost inflation falling well below our earlier guidance. Furthermore, we have implemented a review of our capex projects and are revising the development plan for our copper assets in the DRC, so as to improve the capital efficiency of our investment program and returns to shareholders. Our growth program in both Kazakhstan and internationally, has progressed well and is on track to deliver significant value in the coming years. We expect that demand will remain robust for our core commodities in the second half of the year."
Source - ENRC
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