By Thomas Biesheuvel, Bloomberg.
Anglo American Plc joined rival miners in posting lower profits as commodity prices stagnated and slashed its dividend after the businesses it’s looking to exit dragged down earnings.
Anglo is undertaking a sweeping restructuring outlined by Chief Executive Officer Duncan Wanblad last year as the company fended off a takeover approach from BHP Group. It’s already spun off its platinum business, but is now looking to sell diamond miner De Beers. An agreed sale of its coal division has been complicated by a fire at one of its mines.
Anglo reported a 20% drop in underlying earnings from its continuing operations, with profits of $2.95 billion. That includes the copper and iron ore mines that will be its mainstays once the restructuring is complete.
The company will pay an interim dividend of 7 pence a share, 83% down from a year earlier as platinum, coal and diamonds weighed on earnings.
Iron ore prices slumped during the period, while Donald Trump’s trade war is threatening to sap demand for other key outputs including aluminium, copper and lithium. Rio Tinto Group reported a decline in profits Tuesday, while Glencore Plc announced a cost-cutting drive to respond to lower prices.
Anglo’s profits from its continuing operations give investors a glimpse of what a future business will look like. Still, it has multiple hurdles to clear first.It agreed to sell its coal business to Peabody Energy Corp in November in what looked like an early win for Anglo. Yet the deal has come into question after Peabody said a fire at one of the mines could be grounds to walk away from the purchase. Anglo said Thursday that it continues to work with Peabody on completing the deal.
Meanwhile it’s in the process of selling its iconic De Beers business, which posted a $189 million loss in the period. The company expects first round bids next month and there are a series of interested parties, including groups led by two former CEO’s, people familiar with the situation have previously said. Anglo said Thursday that the exit plan is well underway.
“We are delivering on our strategy, transforming Anglo American into a higher margin, more cash generative and more valuable mining company,” Wanblad said in a statement.
Net debt increased slightly to $10.8 billion, before the receipt of most of the proceeds from divestments, Anglo said.