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Despite mining sector cost pressures, Anglo American managed to meet half-year expectations and report record underlying earnings. Higher labour and operating costs were offset by rising metal prices and cost savings, which meant that, in stark contrast to rival Rio Tinto - which disappointed investors on the same day that Anglo reported - these figures were actually something of a sideshow.
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Investor attention was instead focused on news that Anglo's recently appointed chief executive Cynthia Carroll plans to sell the group's Tarmac business and increase share buy-backs. There have been rumours that Tarmac could fetch as much as $7bn (£3.5bn) when it's auctioned, although broker Citigroup has put a more conservative sale value on the business of $4.5bn-£5bn, which is still well ahead of its estimated net present value of $3bn.
The proceeds of this sale, as well as those from the demerger of packaging business Mondi in July and the ongoing exit from the group's gold interests, will help support an additional $4bn return of capital. News of the plans to boost shareholder payouts has helped assuage fears that Anglo could attempt to make a major acquisition at the top of the cycle.
Broker Citigroup forecasts full-year EPS of 443¢ (364¢ in 2006), rising to 506¢ in 2008.
| Anglo American (AAL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,754p | MARKET VALUE: | £37bn | |
| TOUCH: | 2,754-2,755p | 12-MONTH HIGH: | 3,364p | LOW: 2,089p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 1,819¢ | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2006 | 16.2 | 4.4 | 200 | 33 |
| 2007 | 16.9 | 5.4 | 241 | 38 |
| % change | +4 | +23 | +21 | +15 |
Ex-div: 22 Aug Payment: 20 Sep £1=$2.041 |
||||
Anglo is becoming increasingly focused under its new leadership and, trading on a not especially demanding 13 times full-year forecast earnings, the shares are good value.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
