After spending almost $1 billion in buying back shares, Anglo American Plc is changing directions and leaning fully into growth.
The century-old mining company, which announced full-year earnings on Thursday, opted not to allocate more money to share buybacks. That’ll free up money for Anglo to spend on a $3 billion U.K. potash project and a $5 billion copper mine in Peru with help from a partner.
While other mining companies have focused on giving billions back to shareholders and shied away from blockbuster acquisitions, Anglo is charting out a different path. The company has staked its future on building mining operations around the world in a broad spectrum of different materials, rather than focusing on a single product.
Chief Financial Officer Stephen Pearce said that while buybacks are always considered, the spending on the company’s new copper mine means shareholders will likely have to settle for dividends.
Coal Writedown
Like for other miners, coal is a problem for Anglo. It wrote down the of its coal assets by about $900 million -- echoing a similar move by Glencore Plc this week. Climate activism and plunging prices have made coal an unattractive business and Anglo wants to eventually sell its operations.
More broadly, Anglo’s natural resources portfolio has delivered mixed results. The company reaped profits from selling iron ore and precious metals, like platinum and palladium. But diamonds and coal, which have seen prices plunge, took a toll on earnings.
De Beers reported its worst results in years and profits were cut in half. At the same time, earnings almost doubled at its platinum unit, fueled by a surge in palladium and rhodium prices. Supply shocks in Brazil and Australia also helped Anglo’s iron ore unit.
Anglo also said it expects the coronavirus to have less of an impact because the company isn’t as reliant on China compared with its competitors. There could be some hit to iron ore and diamond demand, said Anglo Chief Executive Officer Mark Cutifani.
The shares added 1.7% percent to 2,122 pence as of 8:15 a.m. in London.
Other Highlights
- Full-year adjusted EPS was $2.75 a share, in-line with the estimate of $2.79 a share.
- Ebitda rose 9% to $10 billion.
- Net debt jumped to $4.6 billion.
©2020 Bloomberg L.P.
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