Anglo dividend at risk after poor quarter update
Anglo American is expected to be the latest mining giant to slash its dividend, after a disappointing third-quarter update in which its downgraded its full-year production guidance for many of its key commodities.
The FTSE 100 firm has struggled like the rest of the sector due to slowed demand and surplus supply, which has put immense pressure on prices.
Anglo’s copper production fell three per cent to 171,100 tonnes, in part due to an asset disposal, missing analysts’ forecasts. It cut its full-year target to between 680,000 and 710,000 tonnes, down from 720,000 to 750,000 tonnes.
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The miner, which owns 85 per cent of the diamond company De Beers, cut production of the precious stone by 27 per cent to six million carats due to “current trading conditions”. It trimmed its full-year guidance to the lower end of its range at 29m carats.
Iron ore output from its flagship Kumba mine fell 12 per cent and it lowered full-year guidance to 43m tonnes from 44m tonnes.
“It was a weaker quarter than we anticipated. I think a dividend cut is certainly a strong possibility,” said Nick Hatch, analyst at Canaccord Genuity. “Given the general reduction in full-year guidance, we expect to see earnings forecasts revised lower.”
Haitong Research lagged Anglo American as being the company most at risk of cutting its dividend.
Anglo American’s shares closed 1.27 per cent lower at 596.90p.