Anglo American resumes dividend payments early as net debt falls

In the six months to the end of June, the company was able to reduce its debt by 27% to $6.2bn, which is well ahead of its year-end target of $7bn, driven by $2.7bn free cash flow.

Anglo generated underlying earnings before interest, tax, depreciation and amortisation of $4.1bn, up from $2.5bn in the first half of 2016. Meanwhile, profit attributable to equity shareholders came in at $1.4bn from a loss of $800m a year ago.

It has now resumed its dividend at 48 cents per share for the first half, equal to 40% of underlying earnings.

Chief executive Mark Cutifani said: "The benefits of our relentless focus on driving efficiency through the operations and on upgrading the quality of our portfolio have resulted in a step-change in operational performance and profitability. In the first half, we have delivered a further 20% increase in productivity, a 68% increase in underlying EBITDA and $2.7bn of attributable free cash flow - the outcome of extensive self-help work and tightly controlled capital expenditure, within a stronger price environment.

"Our materially improved balance sheet strength, with gearing at 19% and net debt to annualised EBITDA of 0.8x, has supported the decision to resume dividend payments six months early, establishing a payout policy at a targeted level of 40% of underlying earnings."

Shore Capital said: "AAL reported much improved financial results for H1 2017, with said results generally slightly ahead of our expectations and that of consensus."

Meanwhile, RBC Capital Markets said: "Very strong free cash flows and the early return of the dividend in H1 17 results should act as a trigger to tighten some of the discount that we see in Anglo’s share price versus peers."

At 1125 BST, the shares were up 3.7% to 1,239.50p.