You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

A scintillating week for the Anglo stable

Records were smashed across the board, as rising commodity prices translated into dividend pay-backs.
Image: Anglo American, Flickr

What a great week for the Anglo stable of companies, with Anglo American, Anglo American Platinum (Amplats) and Kumba Iron Ore all announcing their 2021 half-year results.

Records were smashed left and right. Kumba more than doubled Ebitda (earnings before interest, tax, depreciation and amortisation) to R44.4 billion (H1 2020: R17.4 billion) on the back of a 12% increase in production to 20.4 million tons (Mt). Higher sales volumes and improved product quality mix contributed to the improved performance. Average realised export prices were nearly a third higher than the benchmark and more than double that achieved in the prior half year.

Kumba’s share price ended last week nearly 10% higher at R770, and is now up 220% from the low reached after the introduction of Covid lockdowns in March 2020. Shareholders were handsomely rewarded with a 271% bump in dividends to R72.70 per share (H1 2020: R19.80 per share).

Listen: CEO Themba Mkhwanazi on Kumba’s strong dividend and iron ore demand

When you’re making money at this rate, you start looking at ways to de-bottleneck production, and in Kumba’s case, that’s the logistics of shipping iron ore by rail from Sishen to the port of Saldanha. Kumba CEO Themba Mkhwanazi this week pointed to some progress in refurbishing tracks, while working with state-owned rail company Transnet to speed up delivery times.

On the safety front, Kumba is now five years without a work-related fatality.

Anglo American likewise benefitted from surging commodity prices, from platinum group metals (PGMs) to copper and iron ore. The group exited its South African coal businesses in the first half of the year, when these were hived off into Thungela Resources. It also announced an agreement to sell its interests in Cerrejón in Colombia, Latin America’s largest coal mine, as it transitions away from coal altogether.

The group’s Ebitda margin improved 61% over the half year compared with the same period in 2020. Free cash flow of $5.4 billion was used to pay down debt, with $2 billion being returned to shareholders by way of a special dividend and a share buy-back.

CEO Mark Cutifani this week told analysts that the group’s focus over the next three years is to drive “mining-enhancing volume” by 20%.

Copper production from Peru’s Quellaveco mine, one of the world’s largest reserves of copper, kicks in from 2022. “Our business is increasingly geared towards providing the future-enabling metals and minerals for a low-carbon economy and to meet global consumer demand trends. Combined with our commitment to carbon neutrality across our operations by 2040, we are working to meet the expectations of our full breadth of stakeholders,” said Cutifani.

Revenue shot up 114% to $21.8 billion at the halfway stage to June 2021, Ebitda climbed 262% to $12.1 billion, but it’s shareholders who stand to benefit most with a 1 082% increase in dividend and share buybacks, equivalent to $3.31 (2020: $0.28).

Amplats’ high

Anglo Platinum (Amplats) achieved a 47% increase to $2 884 per PGM ounce for the half-year, helped by rhodium and palladium setting new all-time highs of $30 000 and $3 000 per ounce, respectively, while platinum hit a six-year high above $1 300 per ounce.

Listen: Amplats CEO Natascha Viljoen on its record dividend

Amplats recovered well from the February 2020 shutdown of the Anglo Converter Plant to record a 128% increase to 2.3 million PGM ounces of refined production. It will take another two years to clear the inventory accumulated as a result of the plant stoppage.

Rising commodity prices have been kind to Anglo American and Amplats, but there are signs that costs are rising at above inflation levels. In Anglo American’s case, rising costs hit Ebitda by $200 million, while Amplats reported a 9% increase in unit costs per ounce.

Higher commodity prices can provide cover for cost increases like this, but at some point the costs, unless contained, will start to shine through. But for now, it’s celebration time in the Anglo stable.

Listen: Deryk Janse van Rensburg of Anchor Capital suggests keeping close to the door in terms of commodity prices

Please consider contributing as little as R20 in appreciation of our quality independent financial journalism.

AUTHOR PROFILE

COMMENTS   4

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Oh, how different our nation would be if a Sovereign Wealth Fund owned at least 20 to 30% of all mining shares.

This can and should happen.

“five years without a work-related fatality” shows the potential of this first rate top-down team.

Five years, is just a wonderful achievement. Good on everyone involved.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

SEARCH COMPANIES
Enter company name or share code:

ECONOMIC DATA  

  CPIThe Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products Aug 2021 4.60%
  CPI ex OERThe Consumer Price Index excluding Owners’ Equivalent Rent (CPI ex OER) measures monthly changes in prices for a range of consumer products excluding Owners’ equivalent rent that measures changes in the cost of owner-occupied housing Aug 2021 5.20%
  RepoThe rate at which the Reserve Bank lends money to the country’s commercial banks and set by the Reserve Bank’s Monetary Policy Committee. Sep 2021 3.50%
  Prime lendingThe Prime Lending Rate is the rate of interest that commercial banks will charge their clients when issuing a loan (home loan or vehicle finance) Sep 2021 7.00%
INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us: