20th Feb 2020 08:01
(Alliance News) - Anglo American PLC on Thursday reported an earnings improvement in 2019, but gave a mixed production report and warned that continued US and China trade tensions and the coronavirus outbreak present risks going forward.
Anglo American posted a 10% revenue rise to USD29.87 billion, with underlying earnings before interest, tax, depreciation and amortisation up 9.2% to USD10.01 billion.
It was a notch below consensus which pointed to 2019 revenue of USD30.42 billion.
"Average market prices for the group's basket of commodities and products increased by 1%, contributing USD400 million of improvement to underlying Ebitda," Anglo American added.
Profit attributable to equity shareholders was a hair lower at USD3.55 billion.
Anglo American upped its dividend by 9.0% to 1.09 cents from 1.00 cents per share.
Its production report for the year was more hit-and-miss, however.
"Production increased by 1% on a copper equivalent basis, driven by increases at metallurgical coal and Minas-Rio (iron ore), which restarted operations in December 2018. These increases were partly offset by a combination of lower production at Los Bronces (copper) owing to restricted water availability due to drought conditions and De Beers (diamonds), where production was reduced in line with demand. Production was also affected by the impact of Eskom power outages on some of our South African operations," Anglo American explained, referring to Eskom, South Africa's state-owned utility which at times cuts power in a bid to ease demand on its constrained system.
De Beers' rough diamond production decreased 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 could represent a jump as high as 10%. The miner cited an "expected increase in ore from the final open-pit cut at Venetia".
In the platinum group metals business, output edged 1.5% lower to 2.1 million ounces.
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.
At Kumba, iron ore production decreased by 1.6% to 42.4 million tonnes. Kumba Iron Ore Ltd back on Tuesday had said challenges with primary equipment reliability in the first six months of 2019, combined with plant maintenance, had hurt production volumes.
At Minas-Rio, Brazil, production restarted in December 2018, meaning output rose sharply to 23.1 million tonnes from 3.4 million tonnes.
Looking ahead, Anglo American warned: "Risks remain to the downside, with further increases in online purchasing causing additional retailer destocking, developments in US-China trade tensions, the coronavirus which originated in China over Chinese New Year, geo-political escalation in the Middle East and the effect those may have on economic growth and consumer sentiment.
Also getting a nod in the 2019 report was the company's bid to acquire Sirius Minerals PLC.
In January, Anglo American made a formal offer for Sirius Minerals, valuing the London-listed potash mine developer's equity at GBP404.9 million.
Anglo American offered 5.50 pence per Sirius share.
Anglo American said on Thursday: "Anglo American identified Sirius's Woodsmith polyhalite project in North Yorkshire as being of potential interest given the quality of the underlying asset in terms of scale, resource life, operating cost profile and the nature and quality of its product. The project has the potential to fit well with our established strategy of focusing on world-class assets."
Elsewhere, Anglo American Platinum Ltd on Thursday said its Chief Executive Officer Chris Griffith will be stepping down, with Natascha Viljoen taking over with effect April 16.
Anglo American Platinum said: "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."
Viljoen is currently Anglo American's head of processing.
Anglo American shares were marginally higher at ZAR404.82 each in Johannesburg on Thursday morning.
Anglo American Platinum was 0.4% lower at ZAR1,390.16 in Johannesburg.
By Eric Cunha; [email protected]
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