Anglo American to reinstate dividend in 2010 as platinum and diamond prices rebound

Diversified mining group, Anglo American (LSE: AAL) reported that a group operating profit halved to $5 billion for the 12 month period ended December 31 2009 (FY 2008: $10.1 billion), but said it would reinstate its dividend this year thanks to a rebound in commodity prices.

Underlying earnings fell to $2.6 million (2008: $5.2 billion), while profit attributable to equity shareholders fell to $2.4 billion. Net debt was unchanged at $11 billion. Anglo American currently has undrawn facilities and cash on hand of $12 billion.

The impact of the global economic downturn on realised platinum group metals (PGMs), iron ore, export coal, nickel and diamond prices has been the key driver of the decline in earnings, coupled with falling demand, particularly in the Metallurgical Coal and Thermal Coal businesses,” Anglo summarised this morning.

Unlike many of its peers in the FTSE 100, Anglo American’s earnings have a heavy dose of platinum and diamonds. This was reflected in the results today, with the most savage numbers coming from the company’s diamond, platinum and nickel divisions in 2009.

 While copper production delivered a $2 billion operating profit in 2009, iron ore and manganese production $1.489 billion, and coal production $1.17 billion, nickel production reported an operating profit of just $2 million, platinum production $32 million and diamond production $64 million.

This morning Anglo American reported solid improvements on a number of fronts however. The company is in the midst of a major restructuring program, and has already completed a string of disposals and cut its global headcount by 23,400.

 During the year, Anglo American’s copper production rose 33%, iron ore production 82% and nickel production 139%.  The emphasis in the future towards coal, iron ore and copper will continue.

"Anglo American is now a more focused and performance-oriented international mining company. We have a clear strategy in place and are driving harder than ever in pursuit of being the investment, partner and employer of choice in the mining industry. In 2009, we made significant progress on several fronts, delivering on and exceeding our targets - achieving a step change in safety performance, restructuring the Group and laying the foundation for significant cultural change,” Cynthia Carroll, Chief Executive, said

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