Anglo American see earnings rise across 2019 as shares jump almost 2%

Anglo American PLC (LON:AAL) have seen their earnings improve in their preliminary 2019 annual results.

The mining titan told the market that earnings had risen across 2019, however warned shareholders that trading could be hampered by tense US-China relations and the current coronavirus outbreak.

Anglo American said that revenues had jumped 10% to $29.87 billion, as underlying earnings before interest, tax, depreciation and amortisation up 9.2% to $10.01 billion.

Profit attributable to equity shareholders was lower at $3.55 billion, but Anglo American decided to increase their dividend by 9% to 1.09 cents from 1.00 cents per share.

In the production realm, this is where Anglo American saw a mixed bag of results.

The firm noted that De Beers’ rough diamond production fell by 13% to 30.8 million carats, with copper production falling by 4.5% to 638,000 tonnes.

For 2020, production guidance is 32 million to 34 million carats, which means that the firm is expected a 10% jump in 2020. The miner cited an “expected increase in ore from the final open-pit cut at Venetia”.

Metallurgical coal production rose by 5.0% to 22.9 million tonnes but at thermal coal, total export production decreased by 7.7% to 26.4 million tonnes. Additionally, platinum group metals output fell 1.5% lower to 2.1 million ounces.

At their Minas-Rio operations in Brazil, production recommenced in December 2018, meaning output rose sharply to 23.1 million tonnes from 3.4 million tonnes.

However, in Kumba production slowed down. At this site, iron ore production decreased by 1.6% to 42.4 million tonnes – which may come as a disappointment for shareholders.

Mark Cutifani, Chief Executive of Anglo American, said:

“We continue building on the fundamental structural and operational improvements we have embedded across our business. The result is founded on high quality, low cost, world class assets. We have also benefited from product and market diversification, with strong precious metals and iron ore prices offsetting weakness in diamonds and coal, generating a 9% increase in underlying EBITDA to $10.0 billion, a 19% ROCE and a Total Shareholder Return of 31% for the year.

“We continue to invest in high quality, value-adding growth projects across the business, including in copper, diamonds and metallurgical coal, which will drive our volume, margin and cash flow growth over the medium and longer term. Combined with our share buyback of $0.8 billion during the second half of the year, net debt at year end was less than 0.5x EBITDA and we continue to maintain a strong balance sheet through the cycle.”

The firm has been quick to reinstate its position to be a market leader, and the firm has looked to grow.

Cutifani concluded:

“Consistent delivery of underlying improvements continues to enhance Anglo American’s competitive position. We have transformed our operations and delivered significant financial uplift, while building our broad sustainability performance. Guided by our Purpose, we are continuing to reposition our business responsibly for a cleaner, greener, more sustainable world.”

New Anglo American Platinum Ltd CEO appointed

On another note, Anglo American also announced that Chief Executive Officer of Anglo American Platinum Ltd would be stepping down.

The firm said that Natascha Viljoen will be taking over with effect April 16 from Chris Griffith.

Norman Mbazima, Chairman of Anglo American Platinum, said:

“I am delighted to welcome Natascha Viljoen as CEO of Anglo American Platinum. Natascha is a seasoned senior executive, bringing 28 years of operational experience from across our mining industry, spanning many different countries, metals and minerals including, of course, the PGMs. She knows us and our business well, having worked with our executive team over the last five years in leading the changes required to transform the performance of – and commercial value from – our processing operations.”

Anglo American’s deal with Sirius Minerals

In January, Anglo American expressed their intentions to agree an acquisition deal for Sirius Minerals (LON:SXX).

Anglo said that they will offer 5.5p per shares for Sirius, which shows a 34% rise to the closing price of Sirius on Friday which was 4.1p.

Sirius Minerals itself said its directors consider the acquisition to be “fair and reasonable”, and have recommended that shareholders vote in approval of the offer.

The offer is conditional on whether 75% of Sirius shareholders decide to vote in favor for the merger deal, which will be done at an upcoming court meeting.

The share price offer values Sirius at £404.9 million, and is a deal which Anglo American will be thoroughly excited with.

The upcoming court hearing is over the next few weeks – and shareholders will be keen to get their voices and opinions heard.

The results for Anglo American are pleasing, and the firm is undergoing a busy few weeks. The production has slipped, however the acquisition deal with Sirius Minerals should be something that shareholders and the firm remain confident for.

Anglo American will hope that 2020 is a good stable year for the firm, and once tensions in China clear up – then trading should recommence in full flow.

Shares in Anglo American trade at 2,124p (+1.72%). 20/2/20 10:53BST.