Anglo American on track for cost improvements after decent underlying first half

The FTSE 100 mining giant said it generated underlying EBITDA of $4.6bn - an 11% increase - and $1.6bn of attributable free cash flow.

Profit attributable to equity shareholders was $1.3bn - a 9% decline year-on-year.

Underlying earnings per share rose 3% to $1.23, while statutory earnings per share fell 6% to $1.02.

The company claimed to have achieved cost and volume improvements in the period of $0.4bn, saying it was on track for the full year.

It also said the Minas-Rio pipeline inspection was on track, with remedial work to be completed in the fourth quarter, prior to the restart.

The board declared an increased interim dividend of 49 US cents per share, or 40% of first half underlying earnings.

“We have delivered another strong performance during the first half, with an 11% increase in underlying EBITDA to $4.6bn and a 19% return on capital employed,” said Anglo American chief executive Mark Cutifani.

“We have also made good progress against our disciplined capital allocation objectives, strengthening the balance sheet with net debt down to $4b, delivering an increase in the dividend commensurate with earnings, and continuing to invest prudently across the business.

“This strong financial result derives from our consistent productivity improvements in the underlying operations and a stronger price environment for many of our products.”

Cutifani said the company continued to build on the “significant” productivity improvements of recent years, delivering a further two percentage point improvement in the first six months of 2018.

He said a 6% increase in copper equivalent production volumes helped deliver the $0.4bn of cost and volume improvements in the first half, out of the $0.8bn targeted for the full year, against a backdrop of rising input cost inflation and the temporary suspension at Minas‑Rio.

“We see significant further potential to deliver enhanced returns from the portfolio, with our business model and relentless focus on innovation and business improvement resetting our performance benchmarks.

“As we now move forward to develop the world-class Quellaveco copper project in Peru, in conjunction with our partner Mitsubishi, we are excited about the opportunities we see across the business.”