Anglo looks to free up cash flows

Adjusted operating profits for the period fell 37 per cent to $1.72bn (£691m), but the miner plunged to an earnings loss on the back of a $3.5bn asset writedown linked to the Minas-Rio iron ore project in Brazil and the group’s coal assets in Australia.

The writedown for Minas-Rio must have been particularly frustrating for management as commercial shipments only commenced at the end of last year. Frustrating, but perhaps not surprising - the project has been plagued by delays and cost overruns. And the group's De Beers diamond unit, which had made a notable contribution to 2014 cash profits, has struggled to maintain momentum in the early part of this year. Rough diamond sales were down by around a fifth.

There was some solace for shareholders as Anglo managed to maintain the interim payout, but the group may not be able to free up enough cash flow to guarantee this in the future. Net operating cash flow fell by 23 per cent to $2.7bn and even this contraction was tempered by a reduction in the amount of tax paid.

The need to shore up the group's cash flow has given impetus to the turnaround effort launched in 2013 by Anglo’s then new chief executive Mark Cutifani. The group is targeting additional cost savings of $500m. Much of this will be generated by removing 6,000 non-production roles, 2,000 of which will be transferred through the sale of non-core assets.

Earlier this month, the group's coffers benefited to the tune of $1.6bn from the sale of its stake in building materials giant Lafarge Tarmac. Anglo expects to raise a similar amount of cash from the sale of non-core assets over the next couple of years.

JPMorgan Cazenove expects adjusted 2015 EPS of 88¢ against 172¢ in 2014.