Mining giant Anglo American (AAL) has halved its interim dividend after its earnings in the first half of the year took a major blow due to the coronavirus pandemic.

Its shares fell 4% to £18.94 following its decision to reduce its interim shareholder payout to $0.28 per share, compared to $0.62 per share last year, consistent with its policy of paying out 40% of earnings.

It comes as the company said the pandemic ‘did materially impact production’, with varying degrees of lockdown being the main driver for its 11% overall reduction in output.

That led the FTSE 100 firm to report a 39% drop in underlying EBITDA to $3.4 billion in the six months to 30 June, down from $5.5 billion in the same period last year.

DIAMOND EARNINGS COLLAPSE

Revenues fell 16% to $12.5 billion, partly due to lower commodity prices, while net attributable profit fell to just $471 million, compared to $1.9 billion in the first six months of 2019.

Relatively resilient copper, iron ore and platinum group metals (PGMs) demand helped prop up the company’s earnings, with profit from its fabled De Beers diamond unit the weakest since Anglo American took control of the business a decade ago.

De Beers recorded underlying EBITDA of just $2 million – compared to a $519 million profit in the same period last year – with the diamond industry essentially at a halt in the first half of the year due to the pandemic.

‘UGLY RESULTS’

Shore Capital analyst Yuen Low described the results as ‘ugly’ and called the net profit figure ‘pitiful’.

He added that of ‘particular concern’ was that operations generated inflows of just $1.2 billion, compared to $3.4 billion in H1 last year.

Net debt spiked to $7.6 billion, though the company still has $9.2 billion of undrawn banking facilities, and the weighted average maturity on its bonds remains 4.5 years.

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Issue Date: 30 Jul 2020