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- Diversified mining giant Anglo American has reported about a two-thirds fall in interim profit, while it has more than halved its dividend.
- Group production rose about 10%, boosted by copper and iron ore, but it saw a fall in average basket prices of almost a fifth amid a tough global economy.
- But the group says it is still confident in the longer-term prospects of commodities, while it's keeping its guidance unchanged, anticipating a second-half ramp-up.
- For more financial news, go to the News24 Business front page.
Diversified mining giant Anglo American said on Thursday its profits fell by almost two-thirds in its half-year to end-June, hit by lower commodity prices as well as pressure in terms of input costs.
Attributable profit fell by 66% to $1.26 billion (about R22 billion) to end-June, the group said, with total group production rising 10%, but with average prices for its basket of products falling 19%.
This prompted a 13% decline in revenue, while the miner cut its dividend 55.6% to US55c, a $700 million (R12.3 billion) payout.
Anglo, valued at about R752 billion on the JSE, has a portfolio spanning copper, manganese, nickel, coal and crop nutrients. It also mines iron ore, including through JSE-listed subsidiary Kumba Iron Ore, as well as platinum group metals (PGMs) through listed Anglo American Platinum (Amplats). It also owns unlisted diamond miner De Beers.
Group production was boosted by a ramp-up of its new Quellaveco copper mine in Peru - helping with a 42% jump in copper output - as well as strong operational performances of its iron ore assets in Brazil and SA. It also benefitted from higher production of coal in Australia, but saw production declines for both PGMs and diamonds.
De Beers had been transitioning to underground mining at its Venetia mine in the Northern Cape, while Amplats saw a production fall amid lower grades and planned infrastructure closures. PGM production fell 7%.
READ | Amplats hit by falling metal prices, but is there light at the end of the cycle?
Iron Ore, the group's biggest revenue contributor at about a quarter, however, grew volumes 12%, in part due to Kumba Iron Ore, which was recovering from operational challenges in the prior year, though it continues to face SA-specific challenges, including Transnet's dysfunction.
READ | Kumba shares boom - despite a new complication in its export rail woe
"Macro headwinds - principally, weaker prices for our products and input cost inflation - certainly weighed on our first half financial performance," CEO Duncan Wanblad said in a statement.
"We are on track to deliver on our full-year production guidance, which includes a significant anticipated step-up in volumes in the second half.
"Our focus on operational stability and cost control are our key margin levers and we also expect to deliver annual efficiencies of $0.5 billion from across our full range of business support activities.
"Anglo American's portfolio quality, product and geographic diversification together with strong organic growth optionality over the next decade provide positive differentiation and position our business to capitalise on highly attractive structural supply and demand trends," he added.
Shares in Anglo were up about 1.5% in early trade on Thursday and have gained a similar amount on a one-year basis.
Click here for details of its shares.
