Proactive Investors - Run By Investors For Investors

Anglo American unveils shake-up as profits plunge 55%

Miner said group underlying pre-tax earnings before interest fell to US$2.2bn from US$4.9bn
Anglo American unveils shake-up as profits plunge 55%
Anglo plans to focus on diamonds, platinum group metals and copper

Anglo American (LON:AAL) blamed a 55% drop in annual earnings on plunging commodity prices and unveiled a shake-up to cut costs.

Anglo said group underlying pre-tax earnings before interest fell to US$2.2bn from US$4.9bn on a 26% decline in revenue to US$23bn. Underlying EBITDA dipped 38% to US$4.8bn.

The group has cut its asset count to 45 from about 65, having completed or announced US$2.1bn of disposals in 2015.

It said it planned to cut a further US$1.9bn this year and to realise US$3bn-US$4bn from disposals, resulting in expected net debt of less than US$10bn by the end of the year.

The sales of its nickel, niobium and phosphate businesses, and Moranbah and Grosvenor metallurgical coal operations, are under way.

Anglo said it planned to focus on diamonds, platinum group metals and copper, with bulk commodities and other minerals to be managed for cash or disposal.

It expects to reduce capital spending year-on-year by a quarter to less than US$3bn in 2016.

Chief executive Mark Cutifani said: "We're taking decisive action to sustainably improve our cash flows and materially reduce net debt, while focusing on our most competitive assets."

Meanwhile, rating agency Moody's downgraded the senior unsecured ratings of Anglo American and its subsidiaries to (P)Ba3 from (P)Baa3.

Moody's said: "Today's downgrade of AAL's ratings to Ba3 from Baa3 primarily reflects Moody's assessment that the company now faces a higher business risk due to deterioration in commodity market conditions and a longer and more uncertain deleveraging period than previously expected."

At the pre-tax level, the miner made a loss of US$5.4bn, sharply wider than the losses of US$259mln a year ago.

Anglo American said the falls were partly offset by weaker producer country currencies, resulting in an underlying EBIT benefit of US$1.8bn plus cost reductions.

The company saved US$1.3bn in 2015 by cutting unit costs by 16% and increased production volumes by 5%.

It reduced net debt by US$600mln since the half year to US$12.9bn at the end of the calendar year.


Register here to be notified of future AAL Company articles
View full AAL profile

Anglo American Timeline

Related Articles

November 25 2016
"Back in January nobody wanted to know anything about resources, let alone gold, and we saw an opportunity..."
picture of ore sample
January 30 2017
Vast is one of the few junior mining companies around that can actually boast real progress over a difficult year
January 27 2017
Rainmaker Resources may have been conspicuous by its absence from news feeds for a few months and its shares may be towards the bottom of its historical range, but investments are made of far more than that

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use