Anglo American claimed its place as one of the biggest beneficiaries of the global economic recovery and higher commodity prices, posting a record annual profit and showering investors with more than R100bn in cash.
The earnings report on Thursday by Anglo, one of the most visible faces of SA capitalism since its founding in 1917 by Ernest Oppenheimer, rounds off a blockbuster earnings season for heavyweight miners.
Anglo, alongside rivals Rio Tinto, BHP Group and Antofagasta, has been riding on sustained demand for metals such as copper and platinum group metals (PGMs), whose prices have remained elevated. The global economy is rebounding from the pandemic and is hungry for commodities that can help reduce carbon emissions.
The results, the last under long-serving Anglo CEO Mark Cutifani, showed a more than twofold jump in core profit, or underlying earnings before interest, tax, depreciation and amortisation (ebitda), to $20.6bn, helping it return $6.2bn via special and ordinary dividends to shareholders.
Energy transition
Add in the $1bn share buyback programme in August 2021 (two months into the 2022 financial year), and Anglo will have returned a total of $7.2bn (R110bn) to investors. They are backing its transformation journey to become one of the world’s biggest miners of metals deemed essential in the global energy transition.
“We recorded strong demand and prices for many products as economies recouped lost ground, spurred by government stimulus,” Cutifani said.
“Copper and PGMs — essential to the global decarbonisation imperative — and premium-quality iron ore for greener steelmaking, supported by an improving market for diamonds, all contributed to a record financial performance.”
The company used some of the money to shore up its balance sheet, cutting its net debt by $1.7bn to $3.8bn as cash flow from operations leapt to $20.6bn from $8bn the year before. Its free cash flow grew to $7.8bn from $1.2bn.
In a webcast presentation to investors, Anglo chair Stuart Chambers said the company’s strong showing in the year to end-December was not only good for shareholders, but it was also “very good for stakeholders broadly.
“When we do well, our host countries do well, as do communities surrounding our operations, and so it should be,” Chambers said.
The performance of Anglo, whose fortunes are intertwined with SA’s history and economy as it owns blue-chip names such as Anglo American Platinum, Kumba Iron Ore and De Beers, is good news for finance minister Enoch Godongwana as the corporate tax receipts windfall has allowed him to plug holes in the budget, reduce annual borrowings for the first time since 2015, provide personal tax relief and extend the R44bn-a-year unemployment grant.
Trailblazer
It also means Duncan Wanblad, the 54-year-old company veteran with more than 30 years’ service who takes over from Cutifani in April, will inherit a company that has played a trailblazing role in branching out into minerals that will be in demand in the global shift to eco-friendly business practices.
But the outlook for the continued recovery in the global economy took a severe knock on Thursday after Russia attacked Ukraine, triggering a sell-off in global markets and raising fear about Russia’s energy and resources being cut out of the global supply chain.
The share price of Anglo, a must-have in fund managers’ portfolios in recent years, touched a record high of £75.50 before paring gains to close at £73.40.
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