Anglo American (LON:AAL) has released a positive trading update for Q2 2017 demonstrating strong performance in the iron ore, diamond and platinum divisions whilst copper production was modestly lower. Met and thermal coal production was, however, negatively impacted in the quarter.
Iron ore production at Kumba was up 28% QoQ and 23% YoY to 11.4mnt with the reworked mining plan delivering operational efficiencies. Full year guidance has been upgraded from 40-42mnt to 41-43mnt. At Minas Rio the ramp up slowed, however, with QoQ production flat at 4.3mnt.
At De Beers, rough diamond production increased 36% YoY and 18% QoQ to 8.7mncts. The increase was driven by the ramp up at Gaucho Kue in Canada and means the company is on track to meet guidance of 31-33mncts for the full year. However, the product mix appears to have weakened with a 12% YoY decline in prices despite a modest improvement in diamond prices in the wider market.
Copper production of 141kt was down 2% YoY and 1% QoQ. Unplanned disruptions at El Soldado offset strong performance at Los Bronces while poor weather affected Chile’s ports and therefore AAL’s shipments. Guidance remains unchanged for the full year at 570-600kt.
Platinum production of 617koz was up 5% YoY and 8% QoQ as declines from the sale of Rustenburg were offset by strong increases at the JV mines at Mogalakwena, Amandebult and Unki.
Met coal production of 4.9mnt was own 19% YoY an 24% QoQ largely due to the impact of Cyclone Debbie. Thermal coal production was also negatively impacted by unexpected stoppages which resulted in a 4% decline YoY to 6.5mnt. Guidance for both remains unchanged for the full year.
Carr’s Group#: FY 2017 Trading Update
Carr’s Group (LON:CARR)#, the agricultural, food and engineering group, has provided a trading update for the 19 week period ended 16 July 2017.
• Trading remains in-line with expectations
• UK agriculture operations continue to recover with feed & like-for-like retail sales ahead YoY and machinery sales significantly ahead YoY; Feed block sales remain in-line with expectations, with the US business still underperforming but recovering
• UK engineering business continues to be impacted by previously reported issues. However, the delayed contract has now been signed and will be delivered through 2018/19; CARR’s remote handling business is performing ahead of expectations with a pipeline at its highest level for years, and is transacting a significant level of Chinese business
• Last month CARR made a small acquisition, Mortimer Feeds, a feed merchant business principally operating in Cheshire
• Second interim dividend of 0.95p to be paid on 6 October (2016: 0.95p)
• FY 2017 results for year-ending 2 September due 13 November
VSA Comment
An in-line trading update from CARR, following its warning on FY 2017 performance at the end of March, which saw consensus forecasts for PBT fall to £11.6m, -17.7% YoY, from £14.4m, +2.1% YoY, previously.
Although expected, it is nonetheless positive to see the delayed significant engineering contract signed and due to be delivered through FY 2018 and FY 2019. An increased pipeline for both its UK manufacturing and remote handling business also provides confidence that the engineering division may move to recovery in FY 2018.
In agriculture, US cattle prices have continued to show strength with benchmark prices having increased more than 20% since the start of CARR’s FY 2017 period. US operations will also benefit from the opening of CARR’s new feedblock facility in Shelbyville, Tennessee, which remains on track to open in October 2017.
In the UK, for the first nine months of CARR’s FY 2017, compound feed volumes in the overall market have increased 3.2% YoY, compared with decreases of 3.9% in FY 2016, 1.1% in FY 2015 and 5.9% in FY 2014. It is therefore likely we will see the first YoY growth in the market for four years.
Given the extensive media coverage concerning the increasing price of some dairy products and a forecasted milk shortage, we would expect the average milk price to increase in the last few months of FY 2017, having decreased slightly to 26.78ppl in May (last available data). Having been higher than 27ppl earlier in the year, this level should again be surpassed in the coming months.
Both of these factors should continue to support CARR’s UK agriculture business for the rest of the year and into FY 2018.