Trading conditions are not showing any signs of improvement

Tony Lee, finance director

Anglo-American, the world's biggest mining company, said headline core profit was down 7% to $884m (�608m) for the six months to 30 June 2001.

"Trading conditions are not showing any signs of improvement", said group finance director Tony Lee in a conference call.

Anglo-American's shares fell in both London and Johannesburg on the news, and were 43p lower in London at 906p by 1200 BST (1100 GMT).

The profits were at the bottom end of expectations, with analysts predicting a figure between $880m and $940m.

Price falls

Anglo-American said the global slowdown hurt its results as the weakness in the physical metals markets was greater than expected, particularly in base and ferrous metals.

"Sharp declines in demand have been experienced principally in the US and Asia, but increasingly in Europe as well," the mining firm said.

"Any improvement in the global economy is unlikely to result in price recovery in the near term," it said.

In response, it will focus on greater efficiency and cost cutting.

Cost reductions

The $120 million target for cost cuts includes $84m already trimmed this year.

Chief executive Tony Trahar said Anglo may seek between $30m and $40m in cost savings from "significant" job losses at its offices in London and Johannesburg, according to Reuters.

The two offices employ about 850 people in total.

Prices and demand for coal, industrial minerals and some value added forest products remain satisfactory, the group said.

'Disappointed'

"The market is disappointed with the results," said Ross Gardiner, an analyst at SCMB Securities in Johannesburg.

Analysts acknowledged that the group's purchase of diamond firm De Beers earlier this year is not yet fully reflected in its results.

Rival mining groups such as Rio Tinto and recently merged BHP Billiton have reported rises in profit this year.