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Giant commodities miner Anglo American plc (LSE:AAL) acknowledged the deterioration of the world economy in the “short term prospects” as it reported huge decline in EBITDA and underlying earnings.
Releasing its half year results today, the soon to be majority owner of De Beer saw a decline of 31% in EBITDA to US$4.9 billion, while underlying profits plunged 46% to US$1.7 billion, as prices of commodities it produces have fallen over the past six months.
The increase in production across all the natural resources the company produces was not able to offset the drop in prices, owing to the weaker global demand, especially in the advanced economies.
“Alongside continuing structural problems in the euro zone, economic growth has slowed in the US and major emerging economies, such as China, India and Brazil, albeit from high levels,” explained Cynthia Carroll, Chief Executive of the UK-based FTSE 100 miner.
Anglo American mines and trades iron ore, manganese, metallurgical coal, thermal coal, copper, nickel, platinum, and diamonds, making it one of the largest producers of these commodities.
One look at the figures the company reported today was probably enough for some investors today, as over 4 million shares were sold by 1:30 PM GMT, resulting in a decline of 4.6% of Anglo American’s share price to £18.375.
The only positive trend was the company’s dividend payout, which, according to Anglo American, signals the Board’s commitment to a balance of reputation, shareholder interest, and future investment plans.
An increase of 14% from last year’s US 28 cents to US 32 cents, was allotted by the company, in line with the company’s dividend policy.
But the company pins its future in the continued industrialisation and urbanisation trends in “key growth markets”, which, it said, should provide considerable support for prices, which had fallen and hurt the company’s financials.
“Anglo American has a clear strategy of deploying its capital in those commodities with strong fundamentals and the most attractive risk-return profiles that deliver long term, through-the-cycle returns for its shareholders,” the company declared.
Company Spotlight
Anglo American plc is one of the world largest mining companies with operations in six continents. It is the largest producer of platinum and will soon to be the largest producer of diamonds, upon completion of the acquisition of De Beers.
