8th Feb 2016 13:59
LONDON (Alliance News) - Anglo American PLC on Monday said its platinum arm will contribute more to its earnings in 2015 than it did a year earlier despite the unit reporting a substantial drop in earnings during the year.
Anglo American shares were down 3.9% to 349.10 pence per share on Monday afternoon, one of the worst performers in the FTSE 100.
South Africa-based Anglo American Platinum Ltd reported a drop in headline earnings to ZAR107.0 million in 2015 from ZAR786.0 million in 2014.
That means headline earnings dropped more than 86%, as the miner swung to an operating loss from a profit despite reporting a rise in revenue.
Gross revenue rose to ZAR59.82 billion from ZAR55.62 billion, with net sales revenue increasing to ZAR59.81 billion from ZAR55.61 billion.
That pushed its gross profit up to ZAR5.27 billion from ZAR2.64 billion, but a ZAR10.24 billion impairment against property and equipment pushed the firm to a ZAR6.05 billion operating loss from a ZAR843.0 million profit last year.
Other impairments against investments in third-parties, non-current financial assets and against businesses that are currently up for sale, totalled around ZAR7.68 billion, also dragged earnings down.
Anglo American Platinum stressed that all of its operations remain cash positive, stating earnings were "significantly impacted by one-off impairments and restructuring costs".
Refined platinum production in 2015 rose considerably to 2.5 million ounces from 1.9 million ounces. However platinum group metal prices were also down 21% year-on-year.
Anglo American already has said its platinum arm was the only segment of the business to experience a material lift in production in 2015 - with production of the majority of its other commodities experiencing steep falls.
However, Anglo American Platinum reiterated that all decisions on major capital projects remain suspended until at least 2017, as it focuses on retaining positive cashflow from its existing operations and maintaining its balance sheet.
Anglo American said Anglo American Platinum will contribute around USD168.0 million to its underlying earnings in 2015, compared to only USD25.0 million in 2014. Underlying earnings excludes certain items and is used to measure the underlying performance of the business.
Anglo American will release its full-year results for the entire group on February 16.
The London-listed miner has already revealed that iron ore production from South Africa fell 7% year-on-year in 2015 and that thermal coal production was down 2%. Copper production was 5% lower year-on-year whilst diamond production was down 12%. Metallurgical coal production was the only other segment apart from platinum to experience a rise in the year, increasing by 1% from 2014.
Anglo American, like its peers, has been adjusting the business to suit the downturn in the market and ensure it keeps competitive. In December, it outlined "radical" restructuring plans aimed at downsizing the business.
Anglo American suspended its dividend and slashed expenditure, becoming the second London-listed miner after Glencore PLC to suspend its dividend, and announced plans to downsize the amount of assets it owns by a staggering 60%, halving the number of business units it has and leading to significant job losses across the board.
Anglo American currently has 55 assets on its books, which now looks likely to drop to around 22 assets, leading to its staff numbers falling by more than two-thirds to under 50,000, suggesting it will slash about 85,000 jobs. Anglo American had already announced plans to get that 135,000 strong workforce down to 92,000 by 2017 earlier this year, but has now ramped up those restructuring efforts.
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 to USD4.00 billion by selling other assets it holds in its phosphates and niobium divisions by the end of 2017, 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, an Industrial Metals unit which will include platinum and base metals and Bulk Commodities, which will host iron ore and coal.
By Joshua Warner; [email protected]; @JoshAlliance
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