FTSE Miner's Profits Drop 60%

LONDON -- Profits at Kazakh natural-resources group Eurasian Natural Resources (LSE: ENRC.L  )  fell 60% in the first six months of 2012 compared with the same period last year, down to $463 million from $1.2 billion in H1 2011.

ENRC makes most of its money from mining, and shares in the sector have all fallen this year, in no small part due to weakening demand from China, which has knocked commodity prices right down. Indeed, following the news this morning, shares in ENRC have fallen more than 7% at the time of writing -- and they look like they're heading further south.

Management blamed a decline in commodity prices and a challenging economic environment in its half-year results, while increased inflation, depreciation, and wage rates were highlighted as reasons for a 4% rise in cost of sales.

CEO Felix J. Vulis commented, "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."

Last week, Fool contributor Roland Head pointed out that ENRC's price-to-earnings ratio was 4.4 -- one of the lowest in the FTSE 100. However, he warned of "corporate governance concerns" in Kazakhstan and admitted he was not tempted by the company.

The sector is currently volatile, heavily influenced by commodity prices -- but opportunities remain to be had by savvy investors. That's why The Motley Fool has focused on the sector when compiling its most recent report, "How To Unearth Great Oil & Gas Shares," which is free and will be delivered to your inbox immediately. Just click here to have it sent to you so you can start reading straightaway.

Further Motley Fool investment opportunities:

Sam does not own shares in Eurasian Natural Resources. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1985202, ~/Articles/ArticleHandler.aspx, 10/23/2016 4:45:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes