Anglo starts paying dividends
• Shares rise as interim results reveal net debt is down
Anglo American shares shot up on Thursday as the diversified miner resumed dividend payments six months early, returning $0.48c a share, or $600m in total, to shareholders, as CEO Mark Cutifani said it would made a decision on its South African mines in 2018.
Anglo will make a decision next year about its iron, coal and manganese mines in SA, with the outcome of the ANC’s leadership decision at the end of 2017 and mining policies playing a role in that decision, he said.
Anglo’s shares closed more than 3% higher after it reported interim results, showing it had brought its net debt down to $6.2bn, well below the full-year target of $7bn as it reported strong free cash flows on improved production and commodity prices.
One analyst said the free cash-flow metric was “staggering” considering Anglo’s market capitalisation of R276bn.
Attributable profit for the six months to end-June was $1.4bn compared with a $800m loss in the same period a year earlier. Attributable free cash flow more than doubled to $2.7bn, from R1.1bn a year ago.
Anglo declared on Thursday its long expected dividend policy, stating it would return 40% of underlying earnings.
Goldman Sachs analysts forecast a $0.29c dividend in the second half of the year, bringing the full-year dividend to $0.77 a share. They labelled the interim payment as “significantly higher than expected”.
Anglo had “drawn a line under” the group’s asset disposal process and was talking to the government about Anglo’s “future profile”, said Cutifani.
Anglo would not make a final call on its investments in Kumba Iron Ore, export-focused thermal coal mines and its stake in a manganese joint venture in SA during the course of 2017.
“Whatever we do will require the support of the new leadership. I expect in 2018 we’ll take a final position, but it will also be connected to the policy calls the government makes during the next 12 months,” he said, laying into the suspended third iteration of the Mining Charter as unworkable and damaging to the perception of SA as an investment destination.
Anglo would continue repaying its debt, taking advantage of the better prices it was seeing from its bulk commodities, said new finance director Stephen Pearce.
The company would be disciplined in its capital allocation, he said, and was considering a number of relatively small investments around the group’s portfolio to increase production in diamonds, copper and coal.