MELBOURNE — Global mining companies are set to unveil their biggest profit decreases in more than a decade and are clearing the decks with multibillion-dollar write-downs on poorly performing assets as they bring in new chief executives.
A sharp drop in commodity prices is likely to have driven down profits for the second half of last year by 40 percent to 50 percent at the top five mining companies when compared with the same period in 2011, forcing them to shelve expansion projects, slash costs and sell assets.
For the top three — BHP Billiton; Vale, based in Brazil; and Rio Tinto — iron ore earnings are likely to cushion losses in coal, aluminum and nickel for the period.
Chief executives are being punished for splurging in the boom years on projects and acquisitions instead of rewarding shareholders more generously, and investors are calling for Rio Tinto and BHP to rethink their policies.
One of the 10 largest shareholders in BHP and Rio Tinto’s Australian-traded stocks said his fund had been pressing both to pay out more of their profit to shareholders. The shareholder, Ross Barker, the managing director of Australian Foundation Investment, said that the companies were not paying higher dividends to shareholders so they could use the funds for investments that would deliver attractive returns.
Rio Tinto “hasn’t shown a lot of skill at that in recent years, so perhaps the pendulum might tip a bit more towards shareholders,” Mr. Barker said.
Rio Tinto fired Tom Albanese, the chief executive, last month after announcing it was slashing the value of its aluminum business and Mozambique coal assets, the latest in a string of write-downs on pricey acquisitions.
He is not the only one on the way out. Cynthia Carroll, chief executive of Anglo American, hands over to Mark Cutifani in April, while Xstrata is about to lose its chief executive, Mick Davis, as Glencore takes over the company, and BHP has said it is searching for a successor to Marius Kloppers.
Sam Walsh of Rio Tinto will make his first outing as the company’s new chief when it presents its results on Thursday.
Rio Tinto, Vale and Anglo American have already dished out their bad news regarding assets, with Vale having flagged a $1.3 billion charge on its stake in the Norwegian aluminum producer Norsk Hydro, and Anglo American taking a $4 billion charge on its Minas Rio iron ore project in Brazil.
BHP Billiton could follow suit, with analysts expecting write-downs of between $2 billion and $3 billion on its aluminum assets.
RIO TINTO Rio Tinto is expected to report a 49 percent plunge in second-half profit to $3.93 billion, excluding the big write-downs, according to a consensus of analysts’ estimates compiled by the company. Full-year profit is expected to dive 42 percent to $9.08 billion.
Iron ore is expected to make up close to 90 percent of earnings, with losses expected in aluminum and diamonds.
Investors are eager to hear how soon the company can sell off the Pacific Aluminum and diamond businesses, which have both been on the block for more than a year, and how it will deal with the unprofitable aluminum business.
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