Anglo American sees strong profit on higher output and prices

By Eric Onstad

LONDON (Reuters) - Miner Anglo American (AAL.L)(AGLJ.J) posted a 14 percent rise in first-half underlying profit on Thursday on higher output and prices and forecast a strong second half when it will step up the pace of share buybacks.

The firm said despite an uncertain economic outlook due to a slowdown in many developed economies, commodities continued to see strong demand, especially from China.

"We expect a strong second half to the year driven by increased production, further improvements in our operational performance and robust pricing," Chief Executive Cynthia Carroll said in a statement.

Anglo, the world's fourth-biggest mining group by market value, is the first major miner to report during the current results season.

Analysts said the numbers, at the top end of forecasts, would likely calm investors jittery over soaring mining costs and faltering economies.

"Given investor nervousness over cost escalation and the macro backdrop, in-line numbers and a positive outlook statement may offer some comfort to the sector as a whole," analyst Simon Toyne of Numis Securities said in a research note.

"At today's level of a consensus 2009E PER of 7x, the valuation of (Anglo) is a very attractive stand alone," analyst Michael Rawlinson at Liberum Capital said.

Anglo shares, which have underperformed the UK mining index .FTNMX1770 by 5 percent this year, rose 2.8 percent to 2,991 pence by 9:40 a.m. compared to a 2.1 percent rise in the mining index.