Anglo American (LON:AAL) following weak production results has reported weak interim financial results. Revenue in H1 2016 of US$10.62bn was down 20% YoY while EBITDA of US$2.45bn was down 25% YoY. However, the net loss for the period was significantly reduced from US$3.02bn to US$0.81bn due to fewer one offs. Following its suspension in December 2015 there was no dividend announced.
Although commodity prices rallied through the period, they typically averaged lower YoY and this was insufficient to offset weaker production in copper as well as disruption at the Kumba iron ore operations and diamond production curtailments. More positively deleveraging continued with net debt down from US$12.9bn to US$11.7bn since December 2015.
With earnings remaining under pressure and operational issues continuing to dog AAL, the stock is our least preferred of the diversified majors.
KAZ Minerals (LON:KAZ)
Kaz Mineral (LON:KAZ) has reported strong Q2 2016 results following the commissioning of Bozshakol and ramp up at Aktogay. Q2 2016 copper cathode production of 23.6kt was up 16% QoQ and 34% YoY. KAZ is on track to meet guidance of 130-155kt of copper in 2016.
Although copper grades have been significantly diluted by the advent of the new mines, the likely increase in costs in the near term is likely to be offset in part by the strong increase in gold production. Q2 2016 gold production doubled QoQ and was up 169% YoY to 26.1koz which was largely due to the new contribution from Bozshakol.