Anglo American Plc reported profit more than doubled last year amid a recovery in commodities, leading the mining giant to say it no longer needs to sell assets to reduce debt.
The results, which exceeded analysts estimates, show Anglo’s reversal of fortune from last year when investors were questioning whether the company could survive tumbling metals prices. Anglo aims to return to an investment-grade credit rating this year and pay a dividend in 2018.
“We got there. We delivered it. We do not need to sell assets to address the balance sheet issues,” Chief Executive Officer Mark Cutifani said during a call after the results. “If any assets go from here, it will be on the basis of a portfolio adjustment.”
Bigger profits and a stock price that tripled last year show Anglo’s turnaround program, unveiled during the depths of the commodities crisis, has worked. To stay afloat in 2016, Anglo scrapped its dividend and pledged to shrink its business to a fraction of its former size by selling mines and focusing on just three core commodities: platinum, copper and diamonds.
The stock added 2 percent to 1387,50 pence as of 8:01 a.m. in London.
Anglo reported underlying earnings of US$1,72 a share in the year ended Dec. 31, compared with 0,64 cents a year earlier. That compares with an average analyst estimate of $1.39 a share.
Net debt was reduced to US$8,5 billion, well below its target of US$10 billion. Anglo plans to keep reducing debt, with a new goal of below US$7 billion this year, the CEO said.
The company is “happy to keep” its South African assets, including Kumba Iron Ore Ltd. and thermal coal mines given the improved business environment, Cutifani said. The assets had previously been marked for sale. Iron ore is up 80% in the past year.
Anglo is aiming for a portfolio of 30 core assets, down from 40 today, Cutifani said on a call. That’s a big change from last year, when the company said it only wanted 16 core mines.-Bloomberg