Lean years ahead

Pro­duc­ers’ prof­its fol­low de­press­ing re­sources prices

Finweek English Edition - - Companies & Markets -

THE PROFIT EX­PEC­TA­TIONS of re­sources pro­duc­ers are even worse than the dis­mal re­sources mar­ket that Bar­clays’ Kevin Nor­rish re­ferred to at the an­nual Min­ing Ind­aba in Cape Town last week. Nor­rish pointed to the prices of re­sources that fell even faster over the past six to nine months than in the cor­re­spond­ing pe­riod just af­ter the start of the Great De­pres­sion at year-end 1929.

The con­sen­sus views about re­sources pro­duc­ers’ ex­pected prof­its over the next two years – as col­lected by Thom­son Con­sen­sus Rat­ing Sys­tem in the United States – tell of equally dis­mal prospects. That just again con­firms ex­ec­u­tives’ tra­di­tion­ally re­ac­tive be­hav­iour and share­hold­ers’ proac­tive loss.

In­vestors should clearly look be­yond the record prof­its just an­nounced by An­glo Platinum for its 2008 fi­nan­cial year and re­flect on the fu­ture. An­gloplat’s an­nounce­ment it will be lay­ing off at least 11 000 work­ers and the re­ver­sal turn­around of its cash from R4bn to -R8bn – plus a pos­si­ble rights is­sue of new shares to sup­ple­ment its cash – are much more sig­nif­i­cant for in­vestors than last year’s prof­its or div­i­dends.

The ta­ble shows an­a­lysts’ profit pre­dic­tions for a num­ber of the world’s lead­ing re­sources pro­duc­ers. Lean years are fore­cast for 2009 and 2010. It would, of course, be ir­re­spon­si­ble of an­a­lysts to fore­cast any­thing

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.