A $2.9BN write-down of De Beers took parent company Anglo American into a $3.1bn headline earnings loss for the 12 months ended December.
Anglo CEO Duncan Wanblad said in a media call on Thursday that the 85%-owned diamond company was now carried on Anglo’s books at $4bn post the impairment.
He added that De Beers still had about $2bn in diamond stocks consisting of rough and polished goods. “The good news on that is it didn’t last year increase the levels of stock it was carrying,” he added. De Beers was break-even during the year.
Commenting in a presentation later in the day, Anglo CFO John Heasley said a 40% cumulative decline in diamond sales over the past two years had resulted in the sale of polished inventory back into the mid-stream. Inventories peaked at $2bn in July compared to 2023 but had reduced to $1.2bn by year-end.
Despite this, De Beers reported a disappointing first cycle sales number of $130m, although Heasley said an eight percent increase credit card activity in December was “a promising sign” for diamond sales.
Anglo has made rapid progress restructuring its portfolio as it laid out last year amid a hostile takeover attempt by BHP. It has signed agreements to sell its metallurgical coal mines for about $4bn, and its nickel assets for $500m. It also his week confirmed a June date for the demerger of its 67% owned Anglo American Platinum.
De Beers is therefore the last major asset it needs to sell. Asked about progress Wanblad said the group would now proceed to approaching potential buyers, including some unsolicited ‘in-bound’ offer received prior to De Beers completing the 10-year diamond sales agreement with Botswana.
“All the modalities to facilitate a trade sale or a listing through an IPO or a demerger are now in place,” Wanblad said. “Given the state of the market and shape of business we are not expecting much traction or progress on that in first half of this year, but picking up in the second half of year,” he added.
Both a listing or trade sale were in Anglo’s plans until the last moment. A trade sale could be “off-ramped at the last minute,” he said.
On an Ebitda level, Anglo reported a 15% year-on-year decline to $8.5bn owingn to a 10% average decline in commodity prices, largely in iron ore.
Production fell 7%, mainly at the Grosvenor met coal mine in Australia following a fire, and the managed reduction of six million carats at De Beers’ mines.
Unit costs were flat partly owing to job cuts at Amplats and Kumba Iron Ore.
Earnings per share came out at $1.60/s, a 34% decline.
At $10.6bn, net debt was flat year-on-year, although Wanblad confirmed the proceeds from asset sales would be directed towards the balance sheet in the current period.
High debt levels was a factor behind Anglo slowing Woodsmith, its UK polyhalite mineral fertiliser project which would only be ramped up again from 2027. Wanblad said $300m would be spent at the project partly driving a feasibility study as a precursor to the syndication of the project’s capital expenditure.
Anglo announced a 64 US cents per share dividend, a year-on-year decline of 34%. Shares in the company were 3% higher in early Johannesburg trade.
