Anglo American FY boosted by higher metals, iron ore prices

Strong precious metals and iron ore prices offset weakness in diamonds and coal as Anglo American reported a rise in full year profits on Thursday.

Underlying core earnings rose 9% to $10bn, higher than analysts expectations, while net debt increased to $4.6bn. A final dividend of 47 cents a share was declared for a total of $1.09 a share, up 9 cents year on year.

Capital expenditure increased to $3.8bn from $2.8bn a year earlier, the company said on Thursday. Group revenue rose 8% to $29.9bn

An $800m positive foreign exchange impact on underlying earnings before interest, tax, depreciation and amortisation was largely due to the weaker South African rand, Australian dollar and Brazilian real.

Results were also boosted by higher prices in platinum group metals , with average average palladium and rhodium prices strengthening by 50% and 77% respectively due to strong automotive demand driven by tighter emissions regulations in key markets and ,despite a fall in global light duty vehicle sales, .

Palladium and rhodium are used in car catalytic converters.

The company said its Los Bronces copper mine had been hurt by water shortages in Chile due to drought, while diamond output was lower as its open-cast Venetia mine in South Africa transitioned to underground and a mine in Canada reached the end of its life. De Beers' rough diamond production decreased by 13% to 30.8m carats.

Overall demand for rough diamonds was lower owing to challenges in the midstream, as a result of closure of some US 'bricks and mortar' retail outlets and an increase in online purchasing, Anglo said. The negative price and volume impact in the year was $0.5bn, compared with 2018.

Production increased by 1% on a copper equivalent basis, driven by increases at metallurgical coal and the Brazilian Minas-Rio iron ore operation, which restarted in December 2018. Copper production fell 5% to 638,000 tonnes.

In a separate announcement, Anglo named Natascha Viljoen as chief executive officer of its platinum operation, replacing Chris Griffith.