Xstrata plc: Shares trade lower as cost pressures mount
- Details
- Category: Commodities
- Published on Tuesday, 02 August 2011 14:06
- Written by Sam Coventry
Analysts at RBS maintain their Buy rating on Xstrata plc shares.
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Xstrata's 1H11 financial results were only a fraction lower than consensus. As seen with other recent financial reports in the sector, operating costs were again a key factor.
None-the-less, operating EBITDA was 30% higher than 1H10 and attributable profit was 25% higher at US$2,865m.
A note from equity analyst Nick Hatch at RBS says:
"The strength of the Australian Dollar and the South African Rand, as well as weather-related and one-off issues which impacted coal and copper, had a material impact on costs. Inflation-related cost increases amounted to US$412m, of which US$239m relates specifically to mining industry inflation."
RBS have Xstrata at a Buy rating, a target share price is set at 1575.
Looking at the markets this afternoon we see that the FTSE 100 is lower by 0.21%.
"The FTSE 100 stumbled again this morning as bleak US manufacturing data raised fresh concerns about the health of the global economy. Despite the US appearing to have averted a debt default after the House of Representatives approved a deal last night to raise the government's borrowing limit, the threat of a potential US credit rating downgrade still added pressure on the markets," says Chris Beauchamp at IG Index.
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