[miningmx.com] — ANGLO American almost doubled its operating profit in 2010 on the back of higher commodity prices and resumed paying a final dividend to shareholders, the group announced on Friday.
Releasing results for the year to end-December, Anglo also announced a joint venture between its Tarmac subsidiary and Lafarge to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom.
Anglo’s operating profit for the period under review came in at $9.8bn ($9.1bn from core operations), up 97% from 2009’s $4.9bn.
It would pay a final dividend of 40 US cents per share, amounting to a total dividend of 65c for the financial year. The last time Anglo paid a final dividend was at the end of its 2007 financial year, when shareholders were paid-out 86c for every share (a total dividend of 124c). This was followed by a 44c/share interim dividend in 2008, after which the fallout of the economic crisis forced the group to suspend payments until the interim stage in 2010.
In commentary accompanying the results Anglo said 2010’s total dividend will provide a base that will be maintained or increased through the cycle.
“Taking into account the group’s substantial investment programme for future growth, future earnings potential and the continuing need for a robust balance sheet, any surplus cash will be returned to shareholders.’
CEO Cynthia Carroll said the group continued to deliver on its clear strategic objectives during the period under review.
“In addition to benefiting from higher commodity prices, our focused commodity businesses are driving superior operating performances, through major productivity improvements, disciplined cost management and the benefits of our asset optimisation and global supply chain programmes,’ she said.
DIVESTMENTS BEARING FRUIT
“We completed a number of sales of non-core businesses during 2010 and into 2011 and our divestment programme is now well advanced. Anglo American’s Ebitda (earnings before interest, tax, depreciation and amortisation) of $12.0bn, operating profit of $9.8bn and underlying earnings of $5.0bn, reflect delivery on all fronts.’
She said Anglo achieved asset optimisation and procurement benefits of $2.5bn from core businesses alone, well ahead of the group’s 2011 target of $2bn for sustainable projects.
“The productivity benefits that we have achieved have also enabled us to leverage the benefits of higher commodity prices. I expect the value we unlock from asset optimisation to increase further as we embed these best in class practices and continue to improve our operational performance.’
She said Anglo Platinum has been transformed, with 23% productivity gains and cash operating costs controlled below inflation, while exceeding its production target of 2.5 million ounces.
Anglo’s figures were further boosted by strong performances from De Beers and Kumba Iron Ore.
“Our near term production growth of 50% by 2015 is exceptionally strong, with four major projects making excellent progress, enabling us to start up a new mining operation every six to nine months over the next few years,’ she said.
The first such project, the 36,000 tonnes per year Barro Alto nickel project, will begin production in March and more than double the nickel business’ output when it reaches full capacity.
In the fourth quarter of this year, the 200,000t/year expansion of the Los Bronces copper operation will begin production, boasting attractive cash operating costs.
“Anglo American has a truly world class resource base beyond our near and medium-term projects, with the potential to double production over the next decade through our $70bn pipeline of more than 60 projects,” said Carroll. “In the next three years alone, we expect to approve $16bn of projects.’
She said the group has completed divestments from non-core businesses with proceeds of $3.3bn to date. This included the sale of the group’s zinc portfolio, five undeveloped coal assets in Australia and a number of Tarmac’s European businesses.
TARMAC
Anglo said the transaction between Tarmac and Lafarge is expected to deliver recurring synergies of at least $96m per year. The combined sales of the two businesses in 2010 amounted to $2.8bn.
Said Carroll: “While Anglo American’s objective remains to divest its interest in the joint venture over time, this transaction positions us well to maximise value.”
The venture would operate with its own board of directors led by an independent chair and executive management teams drawn from both businesses, Anglo said.
