Anglo American PLC’s (Anglo American) revenues declined 9.7% y-o-y to US$17,915 mn in 1H 08, in line with our estimate, reflecting strategic progress with restructuring of the company’s portfolio, through the disposal of non-core holdings. As a result, the company reported no revenues from discontinued operations in 1H 08, versus US$4,744 mn in revenues from discontinued operations in 1H 07. However, the company reported strong profitability in 1H 08, primarily driven by robust pricing for platinum, copper and iron ore, supported by increased production levels. Demand for most of its metals and minerals, particularly platinum, copper, coking coal and iron ore, remains strong, supported by increasing demand from developing economies which, in turn, is expected to maintain prices at higher levels. In order to better focus on its major segments such as Ferrous Metals and Platinum, Anglo American started 2 new Platinum projects and 1 iron ore project in 1H 08. Although we expect current inflationary pressures to raise costs in the near term, higher metal prices, the company’s restructured portfolio and ongoing capacity expansion projects are encouraging, long term positives. Furthermore, given the recent decline in the ADR, we view the Anglo American ADR as an attractive investment at current levels.

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