Anglo American joins rival miners in cutting dividend, earnings

LONDON, July 27 (Reuters) - Global miner Anglo American cut payouts to shareholders on Thursday after lower commodity prices and higher costs hurt its first-half earnings.

Anglo joined rival miners Rio Tinto , Teck Resources and Freeport-McMoRan in reporting lower profit, and said the short-term economic environment, including economic growth in major consumer China, remained challenging.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $5.1 billion for the six months to June 30, down from $8.7 billion a year earlier and below the $5.3 billion expected on average by eight analysts polled by research firm Vuma.

"We have been a bit surprised by how slow the reopening of China has been and the lack of stimulus that everybody expected. The good news is the politburo in the last couple of days has indicated quite strongly that it will take some action," Chief Executive Duncan Wanblad told reporters.

"What we are certain about is that there will be a recovery, what we are not certain about is the length of time that it is going to take to get from here to that recovery," Wanblad said.

On Monday, China pledged more support for its slowing economy.

Anglo, however, said it is on track to deliver on 2023 production guidance, which includes a significant increase in volumes for the metals it mines during the later half of the year, helping its share price gain around 1% by 1007 GMT.

"We continue to see Anglo American as providing strong relative value and with operations expected to improve in the second half, improved prospects as the year progresses," said RBC Capital Markets analyst Tyler Broda.

In the first half, a 42% increase in copper production, underpinned by the ramp-up of the group's Quellaveco mine operations in Peru, was offset by lower output for coking coal, used in steelmaking, and platinum group metals.

The company declared an interim dividend of $0.55 per share, down 56% from $1.24 a year earlier and far below record levels of 2021, and said net debt was $8.8 billion by June 30, compared with $4.85 billion a year earlier and a consensus estimate of $8.7 billion.

EXECUTIVE CHANGES

Anglo on Thursday appointed John Heasley from engineering company Weir as its new finance director to replace Stephen Pearce, whose retirement was announced in May, and promoted Craig Miller to the role of CEO of its South African unit Amplats.

The London-listed miner has made several management changes over the past year, including appointing new CEOs for the group and diamond unit De Beers.

Part of Anglo's diversification stems from De Beers, which posted a profit of $347 million in the first half, down 63% from $944 million in the first six months of 2022, as inflation reduced demand.

"I don't expect an overnight recovery but we do expect that, as GDP pulls up and China's recovery gathers pace, diamonds demand will follow that, as it always has done," CEO Al Cook told Reuters.

De Beers on July 1 struck a new long-term sales deal with the government of Botswana, where they jointly own Africa's largest diamond producer Debswana.