Anglo ‘back on track’ as it slashes its huge debt pile
EMBATTLED mining group Anglo American declared that its turnaround plan was “on track” as it slashed debt and beat earnings forecasts in the first half of the year.
The South African miner, which at the end of last year unveiled a plan to shrink in size by two thirds, recorded a net loss of $813m (£617m) in the six months to June 30. This was a marked improvement on the $3bn loss it made in the same period a year ago.
Underlying earnings fell to $698m (£531m) from $904m, beating analysts’ expectations, while revenue slipped 14pc to $11.55bn as Anglo faced a prolonged slump in commodity prices.
Mark Cutifani, chief executive, said Anglo’s “decisive action” to restore its balance sheet was paying off. Net debt fell to $11.7bn (£8.9bn) during the period, from $12.9bn at the end of December, with the company on course to reduce it below $10bn by the end of the year.
“We’re pleased with where we’ve got to. Our debt is down by around $700m or $800m more than we thought it would be eight months ago,” Mr Cutifani said. “But we’ve got to keep the rate of change going forward… Clearly there’s a long way to go.”
The miner’s debt pile has been a per- sistent worry for investors. Anglo responded in December by outlining plans to sell off 30 unwanted mines while clamping down on costs and suspending its dividend. It raised $1.5bn earlier this year from selling its niobium and phosphates business.
Anglo’s stock is the best-performing on the FTSE 100 this year, having been the worst in 2015. Its shares are up 181pc in the year to date, and ended up 5.4pc at 842.6p yesterday. Its De Beers sub- sidiary contributed 42pc of Anglo’s earnings in the first half, even though it cut diamond production by 15pc to counter falling prices.
Separately, BHP Billiton said it would set aside up to $1.3bn (£1bn) to cover costs from the fatal accident at an iron ore mine in Brazil last year. The collapse of a dam at its Samarco joint venture unleashed a tidal wave of wastewater into a river valley, flattening two towns and killing 19 people. BHP reports full-year results on August 16.