Tarmac owner Anglo American (AAL) posted a 14 per cent rise in first-half underlying profit on higher output and prices and said its was still exploring options for the sale of the Wolverhampton-based business.
In a statement on Thursday, the company said: “The Tarmac group continues to be managed to maximise shareholder value while options for its sale are being explored.”
Anglo postponed the sale of the division earlier this year because of the problems thrown up by the credit crunch.
Tarmac operating profit decreased by 22 per cent to £84 million compared with the same period in 2007, Anglo said in its interim statement.
It said the decline reflected significant cost increases, particularly energy related, and difficult trading conditions in key markets such as the UK and Spanish residential sectors.
In spite of these, it said Tarmac had maintained market share in most key products in the UK, while continuing to deliver cost savings and operational efficiencies.
Excluding the results of Tarmac Spain, the sale of which is due to be completed during the third quarter, operating profit was 17 per cent below last year.
It said Tarmac had also continued to focus on cost savings during the year, which had successfully delivered total savings of £18.5 million.
Profits in its Aggregate Products business were nine per cent lower, reflecting difficulties in the UK building products sector.
Anglo said the slump in the UK housing market had led to a deterioration in volumes of products such as mortar, blocks and flooring, while hydrocarbon price rises over the past 12 months dramatically increased the cost of energy-intensive products such as lime and cement.
Overall, the group’s performance was at the top end of estimates and as a result, it has forecast a strong second half.
The company said despite an uncertain economic outlook due to a slowdown in many developed economies, commodities continued to see strong demand, especially from China.
Chief executive Cynthia Carroll said in a statement: “We expect a strong second half to the year driven by increased production, further improvements in our operational performance and robust pricing.”
Analyst Michael Rawlinson at Liberum Capital said in a research note investors were expected to be relieved after concern that high costs might trim profits.
He said that with fears about the group not meeting earnings targets there was cause for investors to feel positive.
Anglo, the world’s fourth-biggest mining group by market value, said underlying profit for the first six months of 2008 rose to £1.8 billion from £1.57 billion in 2007.
Operating profit grew 30 per cent to £3.07 billion as production increased in copper, iron ore, manganese ore, coal and phosphates.
The firm proposed an interim dividend up 16 per cent.