Anglo shares rally as firm resumes dividends due to victory over debt

Anglo American CEO Mark Cutifani. (Rodger Bosch, File AFP)
Anglo American CEO Mark Cutifani. (Rodger Bosch, File AFP)

Cape Town – Anglo American [JSE:AGL] has resumed the payment of dividends to shareholders, after the mining firm halved its net debt to $6.2bn.

Anglo, which announced a dividend payout of R6.25934 per ordinary share on Thursday, saw its share increase by 3.5% in the first half hour of trade on the JSE.

CEO Mark Cutifani said the benefits of a relentless focus on driving efficiency through operations and upgrading the quality of its portfolio resulted in a step-change in operational performance and profitability.

In the first half, Anglo delivered a further 20% increase in productivity, a 68% increase in underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) and $2.7bn of attributable free cash flow. This was the outcome of extensive self-help work and tightly controlled capital expenditure within a stronger price environment, it said in a statement on Thursday.

"We have nearly halved our net debt to $6.2bn over the past year to take us well below our year-end target of $7bn,” said Cutifani.

“Our materially improved balance sheet strength, with gearing at 19% and net debt to annualised Ebitda of 0.8%, has supported the decision to resume dividend payments six months early, establishing a pay-out policy at a targeted level of 40% of underlying earnings. This equates to a dividend payment of 48 US cents per share for this half year.

"Looking forward, our focus will continue to be on improving operational performance and converting production and improving costs into consistent cash flow generation, while maintaining strict capital allocation discipline. We are now in a position to consider value accretive growth options and capital returns from within our substantial undeveloped mineral endowment."

Anglo has resumed its dividend policy to target a payout of 40% of underlying earnings.


ZAR/USD
17.15
(-1.05)
ZAR/GBP
21.40
(-0.89)
ZAR/EUR
19.34
(-0.69)
ZAR/AUD
11.89
(-0.41)
ZAR/JPY
0.16
(-0.70)
Gold
1775.79
(-0.51)
Silver
17.97
(-1.56)
Platinum
821.99
(+0.29)
Brent Crude
43.07
(+0.70)
Palladium
1922.01
(+0.27)
All Share
54843.13
(-0.01)
Top 40
50516.25
(+0.02)
Financial 15
10024.58
(-1.08)
Industrial 25
76804.60
(+0.48)
Resource 10
51061.33
(-0.16)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1685 votes
I am taking a hit, but should be able to recover in the next year
23% - 2210 votes
My finances have been devastated
34% - 3274 votes
It's still too early to know what the full effect will be
25% - 2384 votes
Vote