Anglo American revenue, earnings slip as it focuses on costs

Anglo American reported $5bn in underlying EBITDA for the first half of 2024 on Thursday, down 3% year-on-year, after a strong operational performance that it said largely counterbalanced a 10% decrease in the average product basket price.

The FTSE 100 miner highlighted notable strength in its copper and iron ore segments, which collectively contributed $3.5bn to EBITDA.

Revenue for the period totalled $14.46bn for the six months ended 30 June, down 8% compared to the same period last year.

Despite the challenging pricing environment, Anglo American achieved a 4% improvement in unit costs, driven by favourable currency movements, operational enhancements, and effective cost control measures.

However, the company recorded a $0.7bn loss attributable to equity shareholders, primarily due to a $1.6bn impairment on the Woodsmith project following a decision to slow its development.

Anglo American's net debt stood at $11.1bn , maintaining a leverage ratio of 1.1 times annualised EBITDA.

The company said it remained on track with its cost reduction initiatives, aiming to cut annual costs by around $1.7bn and reduce capital expenditure by around $1.6bn over the 2024 to 2026 period.

An interim dividend of $0.5bn, or 42 cents per share, was declared, aligning with the company's policy of a 40% payout ratio.

“I am very encouraged by a strong operational performance that delivered steady volumes and a 4% improvement in unit costs, while still facing weak cyclical markets for platinum group metals and diamonds,” said chief executive officer Duncan Wanblad.

“We are on track to reduce our annual run rate costs by $1.7bn and reduce capital spend by $1.6bn over the 2024-2026 period.

“We are moving at pace to create a much more agile and structurally profitable mining company focused on our exceptional quality copper and premium iron ore businesses, which both continue to perform very strongly, while maintaining our growth optionality in crop nutrients.”

Wanblad said the company was committed to completing the key elements of the transformation by the end of 2025, creating a “simpler, highly valued” mining company with “extensive” growth options and considerable strategic flexibility.

“We are transforming Anglo American by focusing on our world-class asset base in copper, premium iron ore and crop nutrients, thereby accelerating the recognition of value inherent in our business.

“From that compelling platform, I believe our proven project delivery capabilities, global relationship networks and longstanding reputation as a responsible mining company will together help us unlock the outstanding mineral endowment options within our portfolio and other growth opportunities that we will aim to secure over time.

“We have taken clear and decisive action to deliver value in the long term interests of our shareholders and other stakeholders, from a portfolio that will deliver the products that underpin the energy transition, improving global living standards and food security.”

At 0924 BST, shares in Anglo American were down 0.86% at 2,204p.

Reporting by Josh White for Sharecast.com.