Anglo American Swings Towards $1.6 Billion Net Impairment Loss – Update

By Christian Moess Laursen

Anglo American fell to a net loss in the first half of the year after taking a $1.6 billion write-down on a UK crop nutrients project, which was part of a reorganisation across the Anglo American group.

The diversified mining group said on Thursday it had a net loss of $672 million in the first half, compared with a profit of $1.26 billion a year earlier, while underlying earnings before interest, taxes, depreciation and amortization – its preferred measure – fell 3% to $5.0 billion.

Revenue fell 8% to $14.46 billion. Analysts had forecast $1.12 billion in net income on revenue of $14.27 billion, according to a consensus by Visible Alpha.

The mining company, which is among the world’s largest by revenue, said results were impacted by lower iron ore prices and sales, as well as impairments related to its Woodsmith polyhalite project.

The impairment is the result of Anglo’s decision, taken as part of an ambitious restructuring unveiled in May, to slow asset development.

As a result, Anglo will scale back its operations to focus on its copper and iron ore mining businesses, as well as its Woodsmith business.

Copper prices have risen sharply this year, hitting an all-time high in May, driving a 37 per cent increase in adjusted net income (EBITDA) from Anglo’s copper business to $2.04 billion.

Meanwhile, the iron ore unit reported a 20 percent decline in adjusted Ebitda to $1.41 billion.

Last week, Anglo lowered its coal production target for this year after a fire at its Grosvenor mine in Australia suspended production for the foreseeable future. The mine had been expected to contribute at least almost a quarter of its coal output this year.

As part of a group-wide restructuring, Anglo plans to shed its coal business — along with its platinum metals subsidiary Anglo American Platinum and its renowned diamond unit De Beers. It also plans to either shed or preserve its nickel business.

The FTSE 100 company did not say whether the Grosvenor fire incident had hampered a potential sale prospect. The mine suspension, coupled with uncertainty over when it will resume, is likely to impact the speed of the sale process and potentially the price, Berenberg analysts said in a research note earlier this month.

“We are committed to completing key elements of this transformation by the end of 2025,” said CEO Duncan Wanblad.

Anglo announced an interim dividend of 42 cents per share, equivalent to $500 million, in line with its payout policy.

At 07:24 GMT, shares were down 0.8% at £22.05.

Write to Christian Moess Laursen at [email protected]

(END) Dow Jones Newswires

July 25, 2024, 03:41 ET (07:41 GMT)