Anglo American profit tumbles but metal prices keep earnings steady
Mining giant Anglo American this morning said that profit slipped 40 per cent in 2020, falling from $3.5bn to $2.1bn, as the coronavirus dried up demand for commodities around the world.
However, its earnings – Anglo American’s preferred metric – came in at $9.8bn, ahead of the $9.4bn predicted by analysts. That’s just short of the £$10bn booked in 2019.
This represents an impressive recovery from a first half in which the firm booked just $3.4bn in earnings.
As a result, the FTSE 100 blue chip boosted its dividend to $0.73 per share, in line with its 40 per cent dividend policy.
That’s 53 per cent up from last year’s payout, and ahead of analyst forecasts of a $0.65 per share dividend.
Shares rose 3.3 per cent on the back of this morning’s announcement.
Anglo American’s performance was driven by growth in profits from iron ore, platinum group metals and copper, which offset declining returns from coal and diamonds.
The results came after a stellar couple of weeks for the FTSE 100’s mining giants, with the likes of Glencore and Rio Tinto imposing generous dividend policies, much to the delight of investors.
The change of strategy is largely founded on the recent surge in metal prices, which has led some analysts to suggest that a new commodities “supercycle” is imminent.
Anglo American’s shares are themselves up 40 per cent over the past 12 months, despite a sharp drop off in profit and revenue due to the Covid-led slump in production.
Looking to the future, chief executive Mark Cutifani said that the wave of price increases would help the firm come back from the economic hit of Covid-19.
“Looking further out, we benefit from a sequence of high returning growth options, mainly in copper, platinum group metals, and now also crop nutrients”, he said.
“Our business is increasingly positioned to supply those products that are fundamental to enabling a low carbon economy and catering to global consumer demand trends.