|Global mining company Anglo American plc (Anglo) has released its interim financial results for 2017 which show overall positive performance for the company for the first half of 2017 (H1 2017) when compared with H1 2016: production across Anglo's mining assets up 9 percent; EBITDA improved by 68 percent; capital expenditure down 31 percent; 27 percent drop in net debt (US$6.2 billion versus US$8.5 billion reported in H1 2016)
Based on Anglo's strong results, the company has announced that it will be resuming dividend payments to shareholders, six months earlier than planned.
Commenting on the results, Anglo's Chief Executive Mark Cutifani says: "The benefits of our relentless focus on driving efficiency through the operations and on upgrading the quality of our portfolio have resulted in a step-change in operational performance and profitability. In the first half, we have delivered a further 20% increase in productivity, a 68% increase in underlying EBITDA and $2.7 billion of attributable free cash flow - the outcome of extensive self-help work and tightly controlled capital expenditure, within a stronger price environment.
Continues Cutifani: "We have nearly halved our net debt to $6.2 billion over the past year to take us well below our year-end target of $7 billion. Our materially improved balance sheet strength, with gearing(1) at 19% and net debt to annualised EBITDA of 0.8x, has supported the decision to resume dividend payments six months early, establishing a pay-out policy at a targeted level of 40% of underlying earnings. This equates to a dividend payment of 48 US cents per share for this half year."
Looking at Anglo's De Beers Group, total revenue for the first half of 2017 is reported down by 4 percent to US$3.1 billion, compared with US$3.3 billion in H1 2016. This was driven by lower rough diamond revenue as H1 2016 experienced strong restocking by the midstream, notes the report.
The average realized rough diamond price decreased by 12 percent to US$156 per carat, though this was partially offset by a 7 percent increase in consolidated sales volumes to 18.4 million carats. This reflected stronger demand for lower-value goods in Q1 2017, says the company, following a recovery from the initial impact of India's demonetization program in late 2016. The lower-value mix was compensated in part by a higher average rough price index, which was 4 percent higher when compared with H1 2016.
De Beers reports that preliminary consumer demand data for diamond jewelry for the start of 2017 shows continued growth in the U.S. and slight improvements in China in local currency. The report notes some changes in U.S. consumer behavior - with growth seen in the independent jewelers' sector contrasting with some weakness from large chains.During 2017, De Beers expects to invest a total of around $140 million in marketing (an increase of around 20 percent compared with 2016) through a combination of proprietary and partnership activity across the U.S., China and India. The company notes that it has also substantially increased its investment in the Diamond Producers Association (DPA) in 2017.