Anglo plans to cut annual dividend
Anglo American plans to reduce its annual dividend after metals prices fell to the lowest in about six years, according to two people with knowledge of the plans.
The producer may announce the cut as soon as Tuesday, when it hosts an investor day in London to update shareholders on plans to combat the China-led commodities downturn.
The miner also plans to move its dividend to a ratio-based payout, which allows companies to adjust payments as profits rise or fall..
Speculation that Anglo may follow Glencore in cutting its dividend has increased as the largest mining companies contend with the rout in raw material prices.
Anglo’s stock slid 25% last month on investor concerns about its ability to weather the slump in all the commodities it mines, from iron ore and platinum, to copper and diamonds. An Anglo spokesperson declined to comment. Anglo’s biggest investor, the Public Investment Corporation, said in September that it would back any initiatives by the company to ensure a sustainable future. Anglo surprised investors by maintaining its interim dividend in July, when CEO Mark Cutifani said the annual payout was under review.
Cutifani’s attempts to turn around Anglo’s fortunes have failed to stem the company’s slide – it has tumbled 67% this year.
Anglo’s net debt totals $11.9 billion (R171 billion) and it has a long-term borrowing target of $10 billion to $12 billion. The dividend costs the company more than $1 billion a year.