Surprise! Anglo American (AAL) is back to the dividend register, having previously told the market it would forgo an interim payout. Half-year figures show several sources of this renewed confidence, including stronger prices, tight control of capital expenditure, and a focus on costs and self-help that delivered a whopping 20 per cent increase in productivity. However, as analysts at Investec predicted prior to these results, the likely catalyst for the dividend was the ZAR15.97 (94p) per share pay-out by majority-owned Kumba Iron Ore (SA:KIO), announced two days before Anglo’s numbers.
That one of Anglo’s subsidiaries could declare a half-year distribution equivalent to $400m (£304m) shows how profitable the period was. After depreciation and amortisation, finance costs and income taxes, the iron ore and manganese division added $498m to underlying earnings, bested by a $778m contribution from the coal business. On the back of such buoyant prices, Anglo has taken the opportunity to exit several of its South African and Australian coal properties.
A 75 per cent drop in expansionary capital spending left enough free cash flow for Anglo to cut 27 per cent out of the net debt pile to $6.2bn, well ahead of a $7bn year-end target. The effect is unlikely to be as pronounced in the second half, when capital expenditure is expected to hit $1.5bn.
Investec expects normalised pre-tax profit of $4.9bn and EPS of $2.05 in the year to December, compared with $3.4bn and $1.72 in 2016.
| ANGLO AMERICAN (AAL) | ||||
| ORD PRICE: | 1,233p | MARKET VALUE: | £15.9bn | |
| TOUCH: | 1,233-1,234p | 12-MONTH HIGH: | 1,423p | LOW: 765p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 1,624¢ | NET DEBT: | 23% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 9.9 | -0.36 | -63 | nil |
| 2017 | 12.1 | 2.42 | 109 | 48.0 |
| % change | +22 | - | - | - |
| Ex-div: | 10 Aug | |||
| Payment: | 22 Sep | |||
| £1=$1.31 | ||||
