By Christian Moess Laursen
Anglo American is scheduled to report results for 2023 on Thursday. Here is what you need to know.
REVENUE FORECAST: The diversified mining major is expected to post a full-year revenue of $30.83 billion, according to a consensus of 17 analysts' forecasts compiled by FactSet. This would be a decline from the prior-year's figure of $35.12 billion.
UNDERLYING EBITDA FORECAST: Underlying earnings before interest, taxes, depreciation and amortization are expected at $9.83 billion by consensus, compared with $14.495 billion a year prior.
NET PROFIT FORECAST: The London-based miner's net profit is forecast to plummet to $2.44 billion from $4.51 billion.
Shares in Anglo American tumbled 39% through 2023, weighed by falling commodity prices, the rise of lab-grown diamonds and December's cut to production targets.
WHAT TO WATCH
--Platinum group metals were the company's biggest profit driver a year ago, but given the subsector's persistent headwinds through 2023, this is likely to change. Iron ore and copper, which contributed 35% and 29%, respectively, of underlying Ebitda at half-year results are expected to have become key contributors.
--Anglo American's net debt is expected by consensus to have widened to $10.75 billion from $6.92 billion a year prior. This partly explains growing calls for asset disposals, thus far resisted by the relatively new leadership, AJ Bell analysts said in a market comment. "Pressure for asset sales is building and the arrival of an activist investor or even a predator would not be the biggest shock in the world," they wrote. The resistance to divest is likely due to the depressed prices that the FTSE 100-listed group would receive amid a period of weak commodity prices, they said.
--The global miner has a policy of paying out 40% of net profit in dividends to shareholders, but whether the company can maintain this ratio is a key question, HSBC analysts said in a research note. A year ago, it declared a final dividend of 74 U.S. cents a share, which took the full-year payout to $1.98. For 2023, analysts expect a full-year dividend of 93 cents, according to a FactSet-provided consensus.
--The company is likely to provide an update on cost-saving progress, UBS analysts said in a recent research note. Anglo American is targeting a $1 billion cut to costs by the end of 2024. Any guidance on restructuring will be a key item to look out for, HSBC analysts wrote in a note. On Monday, its subsidiary Anglo American Platinum announced a restructuring plan that would cut around 3,700 jobs.
--Due to the market weakness in diamonds and nickel, there is potential for Anglo American to book an impairment on assets in those markets, UBS analysts said. "We believe that [an impairment] is likely to draw headlines, particularly in the case of De Beers [its diamond subsidiary], which we continue to believe Anglo should divest," Berenberg analysts wrote in a note.
Write to Christian Moess Laursen at christian.moess@wsj.com
(END) Dow Jones Newswires
February 21, 2024 04:53 ET (09:53 GMT)
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