ENRC leaps 129% but is hit by price worries

Eurasian Natural Resources Corporation, the Kazakhstan iron ore giant, today worried the market over potential price volatility.

Half-year results showed a strong financial performance built on the continued strength of the Chinese economy.

Chief executive Felix Vulis emphasised the robust operating and financial performance in the first half of the year but said the "risk of commodity market volatility in the near term and the management of costs remain a challenge".

The first half saw revenues up 80% to $3 billion (£1.9 billion) beacause of higher commodity prices and underlying profits up 129% to $1.4 billion.

However, shares fell 27p to 941p as analysts chose to focus on the company's commodity price concerns. One analyst highlighted how Enrc was guiding investors to calculate their forecasts for ferrochrome revenues based on $1.20 per pound rather than the $1.30 price they had been using.

Vulis was confident about growth in African markets after the acquisitions of copper and cobalt producer Chambishi and a stake in South African platinum producer Northam Platinum earlier this year.

ENRC will pay a first-half dividend of 12.5 cents a share, compared with six cents last year, increasing the payout ratio to 18%, "to reflect our confidence in the future and our strong balance sheet position", Vulis said.

It will consider acquisitions in Africa to raise output and add commodities to its portfolio, he said today. "Africa is a good place to look," said Vulis.