UPDATE 1-New Anglo CEO to slash costs as profit drops
LONDON, July 26 (Reuters) - Global miner Anglo American , in the first set of earnings released under its new chief executive, vowed to slash spending and boost cash flow by $1.3 billion a year by 2016 as it reported a 15 percent drop in first-half profit.
Anglo, the first of the diversified majors to publish results, said underlying operating profit fell in the six months to $3.3 billion, ahead of a consensus estimate of $3.12 billion. Underlying earnings per share (EPS) came to $0.98.
Anglo, the smallest of the major diversified miners, has underperformed its peers for much of the past decade, most recently battling labour unrest in South Africa, where it generates half its earnings, and multi-billion dollar cost overruns in Brazil.
Mark Cutifani, who joined the miner in April from AngloGold, has been reviewing the business over the past four months. Though investors had not expected a quick fix, they had hoped the new boss would lay out his vision.
"Preliminary feedback also indicates that we do not require wholesale change to our portfolio," Cutifani said in a statement on Friday. "But we do need to become much more disciplined, more effective and more efficient to drive a step change in delivery to extract greater value and returns for our shareholders."
Cutifani, who also announced a shakeup of the group structure to consolidated 10 business units into six, said cuts would include slashing 2103 capital expenditure by $1 billion and a target for an annual cost saving in structure and overhead costs of $500 million.
Anglo had also been criticised for over-spending on early stage project studies, and it said on Friday that would be cut by $300 million per year - roughly a third of current spend.
Anglo held its interim dividend at 32 cents per share.