It took a while for the market to digest Anglo American' s (AAL) full-year results, which were accompanied by a fresh strategic plan to cope with battered commodity markets. A volatile trading period ensued as investors struggled with the implications of the release, but by the end of the day, Anglo's market valuation was little changed.
Such tumult was always likely, as Anglo had little option but to slash and burn. The miner now thinks it can reverse Moody's move to downgrade its stock to junk through a further $1.9bn (£1.3bn) of cost and productivity improvements this year, and an exclusive focus on copper, diamonds and platinum group metals. This year's asset disposal target has also now been raised to $3-4bn in order to reduce net debt to $10bn by December and to a more sustainable 2.5 times net income in the medium term.
However, as Canaccord analyst Nick Hatch points out, this introduces two big implementation risks: potential asset acquirers will likely view Anglo as a forced seller, and exits from South African mines could precipitate issues with both unions and politicians.
On average, Bloomberg data shows that analysts expect adjusted EPS of 10.6¢ this year, rising to 47.5¢ in 2017.
ANGLO AMERICAN (AAL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 461p | MARKET VALUE: | £5.95bn | |
| TOUCH: | 460.5-461p | 12-MONTH HIGH: | 1,268p | LOW: 216p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | na | |
| NET ASSET VALUE: | 1,285¢ | NET DEBT: | 60% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 30.6 | 10.8 | 510 | 74 |
| 2012 | 28.7 | -0.2 | -117 | 85 |
| 2013 | 29.3 | 1.7 | -75 | 85 |
| 2014 | 27.1 | -0.3 | -196 | 85 |
| 2015 | 20.5 | -5.5 | -436 | 32 |
| % change | -24 | - | - | -62 |
Ex-div: na Payment: na £1=$1.44 | ||||
