Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

UPDATE 3-Anglo American aims to resume dividend, no longer a forced seller

Published 22/02/2017, 01:55 am
© Reuters.  UPDATE 3-Anglo American aims to resume dividend, no longer a forced seller
UK100
-
BHP
-
AAL
-
BHPB
-
HG
-
FTNMX551030
-

* 2016 EBITDA $6.1 bln, just ahead of consensus

* Net debt drops to $8.5 bln; eyes $7 bln this year

* Aims to keep around 30 central assets (Adds CEO comments about failed sales, possible spin-off)

By Barbara Lewis and Eric Onstad

LONDON, Feb 21 (Reuters) - Anglo American (LON:AAL) aims to reinstate dividends at the end of this year after rising commodity prices helped it to boost earnings and cut debt, it said on Tuesday, adding it would only sell more assets to sharpen its focus and not because it needed money.

The miner, which focuses on diamonds, platinum and copper, also said it would keep coal and nickel assets it had planned to sell after cutting costs and rejecting bids as too low.

Anglo was among the miners hardest hit by a slump in commodity prices in 2015, and a big gainer from a recovery in 2016 when it was the top performer in Britain's benchmark FTSE 100 index .FTSE .

In the depths of the downturn, Anglo said it would reduce its assets to 16 core commodities. Now it says the aim is to shrink from the roughly 40 assets it still has to around 30.

"We don't need to sell assets to address the balance sheet because it's done," CEO Mark Cutifani told reporters.

"If any assets go from here, it will be on the basis of cleaning up as we continue to improve the quality of the overall portfolio and ensuring we're robust."

Anglo said 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) rose 25 percent to $6.1 billion, while net debt fell 34 percent to $8.5 billion, well within a $10 billion limit set for 2016.

The goal for this year is to cut debt to $7 billion, to get an investment grade credit rating and to restore dividend payments, Cutifani said.

Analysts said the results beat expectations, but Anglo's shares had slipped 1.5 percent by 1415 GMT, more than the overall mining sector .FTNMX1770 , which was down 0.4 percent.

Rival BHP Billiton BHP.AX BLT.L earlier on Tuesday reported an almost eight-fold increase in underlying first-half net profit and a bigger-than-expected dividend. extent of deleveraging should give confidence in Anglo's renewed financial strength," Bernstein analysts said in a note, adding the decision to hold on to high margin coking coal and nickel assets was positive. They reiterated an "outperform" rating on the stock.

SHIFT IN MOOD

In December 2015, Anglo unveiled plans to offload three-fifths of its assets and focus on diamonds, platinum and copper. the assets on offer were coal mines, which failed to attract high enough offers, Cutifani said. He added Anglo had cut unit costs by 7 percent at its Australian coal mines and the company could fruitfully keep operating them.

"There's more value we can extract and at the moment, no one's willing to pay the price, so we'll run them," he said.

Asked about Anglo's Australian coal assets, BHP Billiton CEO Andrew Mackenzie said they were high quality, but he was only willing to pay the right price.

"We want them when we can get them for a price that adds (shareholder) value," he told reporters.

Australian Newcastle thermal coal prices GCLNWCPFBMc1 soared last year, more than doubling at their peak, ending the year 80 percent higher.

Cutifani was asked about a possible spin-off of Anglo's South African operations after the group's biggest shareholder, state-owned Public Investment Corp, proposed a separate locally-focused company be created and run by South Africans.

"We would be open to looking at a different structure in South Africa as long as I could demonstrate to all shareholders that it was something in their best interests," he said.

Analysts have said shareholders in the London-listed shares might be at a disadvantage to their South African counterparts AGLJ.J under a spin-off.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.