London, England — MININGREVIEW.COM —20 February 2009 – Anglo American Plc – the fourth largest diversified mining group in the world by market value –has scrapped its 2008 final dividend to conserve cash, and says it will cut 19 000 jobs as it posted a 1% fall in profit, missing analysts’ forecasts.
Reuters reports that Anglo shares – which have underperformed the UK mining index by 25% so far this year – tumbled here by 11.4% to 1 095 pence by 0920 GMT today, versus a 6.5% fall in the mining index.
The firm – the world’s dominant platinum producer and fourth-largest iron ore exporter – confirmed that it planned to cut 19 000 jobs by the end of the year. This accounted for 10% of the workforce of 190 000, based on figures on its website.
“As we begin 2009, the economic outlook remains weak with limited visibility, and we are continuing to experience volatility and downward pressure on commodity prices,” chief executive Cynthia Carroll acknowledged. “Notwithstanding the other measures we have taken, the board has decided to suspend dividend payments in order to preserve the group’s strategic growth options.”
With the final 2008 dividend scrapped, the total payment for 2008 will consist of the interim dividend of 44 cents per share, down 65% from the total of US$1.24 in 2007. Payments will resume as soon as possible, Anglo said.
Carroll told a conference call here that although the firm was keeping an eye out for possible takeover opportunities, its planned mine expansions were the priority.
"We compare on a regular basis our internal opportunities with those we assess externally,” she added. “What we would say today is that based on those comparisons, and we think that the internal growth prospects that we have before us are most attractive.”
She said Anglo was not currently planning to invest in Australia’s Fortescue Metals Group, which revealed earlier this week that it had held talks with both Anglo and China’s sovereign wealth fund about possible investments.
Anglo posted earnings per share before exceptional items of US$4.36, down from US$4.40 in 2007, and compared to the US$4.96 expected by seven analysts surveyed by Reuters. The group, which focuses on southern Africa, said operating profit had fallen by 0.3% to US$10.09 billion (R101 billion).
Chief Financial Officer Rene Medori said the dividend move and actions already taken to cut costs would mean that the firm would not have to ask shareholders for cash.
“With the actions that we have taken in terms of cash flow preservation and the level of debt that we have, we don’t believe that we need to contemplate a rights issue,” he told the conference call.
Net debt at the end of 2008 was US$11.04 billion (R111 billion), and Anglo said it had undrawn bank facilities and cash of over US$7 billion (R70 billion).
The group has raised US$434 million (R4.4 billion) so far this year by further cutting its stake in former majority-owned AngloGold Ashanti from 16.3% to 11.88%.
“We will cut platinum production by 300 000 ounces and reduce thermal and coking coal output each by 2 million tonnes,” Carroll concluded.