A remarkable comeback

One of the attractions of buying a massively diversified conglomerate such as Anglo American back in the good old days when it dominated the JSE was that you could buy a few shares and tuck them away, safe in the knowledge that it was likely to plod along without giving you sleepless nights. This has hardly been the experience of recent years, during which the share price has been flung around like a dinghy in a hurricane.

But since the dark days of January 2016, when it appeared to be following the instructions of the great Chubby Checker’s 1962 hit — “How low can you go?” — the company has pulled off a comeback that would make followers of Lazarus give an approving nod. The good news continues with its 2018 results announcement, which paints a picture of a balance sheet that has strengthened by over $10bn in the past three years, with net debt down to $2.8bn at the end of the year.

This has largely been achieved by a focus on productivity and efficiency. Productivity has doubled over a sixyear period, an achievement that puts it among industry leaders, but which also suggests the organisation must have been decidedly flabby before it decided to sharpen up.

Contributions were strong across the group’s assets, with the major blip being the $600m loss of earnings before interest, tax, depreciation and amortisation (ebitda) caused by the suspension of operations at Minas Rio from March to December after two pipeline leaks.

Overall it’s a great performance, with potential for further growth.

The balance sheet is $10bn stronger with net debt down to $2.8bn