Anglo American Posts Loss, Takes De Beers Writedown Amid Restructuring
Anglo American Plc reported a profit decline as it faces ongoing challenges in its diamond business and pushes forward with a strategic overhaul to focus on iron ore and copper.
Key Points:
* Anglo booked a $2.9 billion impairment on its De Beers diamond unit, adding to a $1.6 billion writedown last year.
* The diamond industry is experiencing a downturn due to declining demand in China and growing popularity of lab-grown gems.
* Anglo plans to exit De Beers through a sale or listing in the second half of the year.
* The company reported a 15% year-over-year decrease in underlying earnings to $8.46 billion.
* Copper and iron ore contributed 76% of Anglo's profit.
* Shares rose 4.1% in London trading.
Restructuring Progress
Anglo has sold its coal and nickel mines and plans to exit platinum later this year, leaving only De Beers to dispose of. The company hopes to make progress on the De Beers exit in the second half of the year.
De Beers Challenges
De Beers posted an underlying loss of $25 million last year, driven by declining demand and inflation. Rough diamond prices have plunged 50% in the past two years.
Financial Metrics
Anglo reduced its final dividend by 46% year-over-year. Net debt remained stable.
Chilean Deal
Anglo announced a joint development agreement with Codelco for the Los Bronces and Andina mines in Chile, aiming to improve the performance of a struggling operation.
Analyst Reaction
Analysts at Jefferies LLC see value in Anglo's restructuring progress and the Chilean deal. They believe the company is attractive on a standalone basis and a potential acquisition target.