THERE was a chance that both Anglo American and Glencore would treat the market to pleasant dividend surprises when they reported their full-year financial figures later this month as both groups had robust balance sheets.
This was in two separate reports produced by Goldman Sachs and follows the bumper payouts paid by South32 in its interim results announcement. The Perth- and Johannesburg-listed group also extended its share buy-back programme by $250m to a total of $1bn. It still had just over $500m in shares to purchase as a result.
“We expect a 2017 financial year dividend per share of 101 US cents – in line with consensus,” said Goldman Sachs in a report. “However, we see scope for upside surprise given the strong balance sheet position,” it added.
Kumba Iron Ore, the Johannesburg firm in which Anglo has a 70% stake, paid out a dividend of its own of some R13.1bn equal R30,97/share following higher production and an improvement in the iron ore price.
“The final dividend at R15/share is almost the same as the half year dividend (R15.97) which implies ~$260m of our $737m final dividend expectation for Anglo,” said RBC Capital Markets in a report on the impact of Kumba’s numbers on Anglo American.
Commenting on Glencore’s cash return, Goldman Sachs said: “We see Glencore surprising to the upside here. We forecast a total 2017 dividend of 20 US cents per share,” it said which compared to the highest estimate of 14 US cents/share. “On our estimates, Glencore can easily pay that amount (~$2.8bn gross) and, to a degree, has to be competitive with Rio Tinto. A 20c/sh dividend would yield ~4%,” it said.
Said RBC Capital Markets in a report in January, following Anglo American’s fourth quarter production report: “The current strength in inflation expectations is continuing to improve sentiment. We continue to favour Anglo American within the large cap diversified miners (RBC 2018 Global Top 30 Idea) and at 4.8x 2018E EV/EBITDA with improving sentiment around South Africa we expect the outperformance to continue”.
Glencore is scheduled to report its full-year numbers on February 21 whilst Anglo is to report its full year figures a day later on February 22.
