8th Dec 2015 08:20
LONDON (Alliance News) - Anglo American PLC Tuesday outlined a "radical" portfolio restructuring and plans to cut costs further by suspending its dividend and cutting expenditure as the miner tries to adjust the business to be more competitive in an environment with falling commodity prices.
The FTSE 100-listed miner said it was setting out an "accelerated and more radical restructuring programme to redefine the focus of its asset portfolio to transform the company's competitive position and create a more resilient business to deliver sustainable shareholder returns."
The most notable element of the plans was Anglo American's intention to reduce its assets by 60%. It wants to sell more assets to build on the USD2.00 billion generated from asset disposals so far, and plans to double that amount by selling other assets related to phosphates and niobium, it said.
Anglo American will then focus on its best assets, consolidating its units to three from six. The new divisions will focus on its diamond unit De Beers, Industrial Metals and Bulk Commodities.
In another substantial change, Anglo American plans to suspend its dividend for the second half of 2015 and for 2016. Once the dividend resumes, the miner plans to change its policy so it is more in line with the company's earnings.
On top of that, Anglo American will cut another USD1.00 billion of capital expenditure before the end of 2016.
Despite the dramatic plans, the miner said its net debt will be still be in the range of USD13.0 to USD13.50 billion at the end of 2015, in line with its previous guidance. Anglo American warned that although it has maintained USD15.00 billion in liquidity, it will need "limited refinancing" in 2016 of USD1.60 billion.
Impairments for the full year are expected to come in a range of USD3.70 to USD4.70 billion, mainly due to asset closures and weaker commodity prices.
Operating costs are also set to drop further, with Anglo American aiming to make USD3.70 billion of cost savings before the end of 2017 compared to 2013 levels, it said. Of those total savings, USD1.60 billion will be delivered before the end of 2015 with another USD1.10 billion in 2016 with the remaining USD1.00 billion coming in 2017 - with the potential for that to accelerate in 2016, it said.
Anglo shares were down 1.8% to 362.40 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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