Miner Anglo American PLC (LON:AAL) has said it plans to resume dividend payments by the end of 2017 as it posted a 25% rise in 2016 earnings and a big drop in net debt.
The FTSE 100-listed firm saw its group underlying earnings (EBITDA) increase to US$6.075bn for the full-year to December 31, up from US$4.854bn in 2015, despite a 3% decrease in average prices.
In late 2015, the group announced it would suspend dividends after a drop in commodity prices, and, to shore up its balance sheet, Anglo announced a major restructuring plan.
But the group said in its statement: “It is currently expected that dividend payments will be reinstated for the end of 2017 (payable in 2018).”
Mark Cutifani, Anglo American’s chief executive, said: "The decisive and wide-ranging operational, cost, capital and portfolio actions we set out in 2016 - to sustainably improve cash flows and strengthen the balance sheet - have enabled us to reduce net debt by 34% to $8.5 billion, significantly below our $10 billion target
"Overall, it's clear that as a result of our decisive actions in 2016, and the results delivered by our people across the company, Anglo American is now more robust, with a stronger balance sheet and more competitive cost structure around a world class diversified asset base.”
In opening deals, Anglo’s shares were up over 2%, or 28.5p at 1,388.5p.
In a note to clients, analysts at Shore Capital noted that BHP “also confirmed press speculation, which we commented on last week, that ‘asset disposals for the purposes of deleveraging are no longer required’, albeit the company ‘will continue to refine [its] asset portfolio over time’ to ensure ‘capital is deployed effectively to generate enhance returns’.
They added: “That said, the priority for 2017 is ‘to deliver further productivity improvements while maintaining capital and cost discipline’ in order to be able to afford the 2017 dividend, and to restore an investment-grade credit rating.”
-- Adds share price, broker comment --