Anglo American Dividend Falls Despite Strong Earnings Growth

Date: Feb 22, 2019

Anglo American PLC has returned less cash to shareholders than the year prior, as the miner reported Thursday that cash flow dipped and expenditure rose in 2018.

The company is paying a final dividend of 51 US cents for 2018, in line with its dividend policy of 40% of underlying earnings. This takes the year’s total to 100 cents, down slightly from 102 cents in 2017.

Market consensus, compiled by Anglo American, had seen a total dividend at 97 cents, so the reduced payout was more generous than expected.

The 40% policy was set up this time last year when the company restored its annual dividend after “materially” improving its balance sheet.

The lower return came as capital expenditure increased significantly on 2017, coming in at USD2.82 billion for 2018, though Anglo American said “rigorous” capital discipline has been applied. Consensus had seen capex for 2018 at USD2.78 billion.

The increase came from higher “stay-in-business” expenditure, higher capital development and stripping expenditure, and optimisation work at Mogalakwena, a platinum mine in Limpopo, South Africa.

Looking to 2019, Anglo American sees capital expenditure increasing to between USD3.8 billion and USD4.1 billion.

Anglo American’s attributable free cash flow fell 36% on the year to USD3.16 billion, with cash flow from operations falling to USD7.8 billion from USD8.4 billion.

Higher earnings from subsidiaries and joint operations, the blue-chip miner said, were offset by lower working capital movements.

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