Johannesburg - Anglo American suspended dividend payments and announced plans to cut 19 000 jobs and scale back production as its debt ballooned by nearly $6bn in 2008 and the outlook for commodities "remains poor", one of the world's largest resources companies said on Friday.
"While the global economy continues to face unprecedented challenges and, with severely constrained financing markets, it is critical for us to safeguard balance sheet flexibility as far as possible," said Cynthia Carroll, Anglo CEO.
"Notwithstanding the other measures we have taken, the Board has decided to suspend dividend payments in order to preserve the Group's strategic growth options," she said.
Anglo will not pay a final dividend. The total dividend will therefore be made up of the interim payment of 44 cents (US).
Anglo's shares fell 12.6% on the London bourse and 13.7% on the JSE. The JSE's all-share index was down 4% because of the decline in the market bellwether share.
"We are committed to resuming dividend payments as soon as market conditions allow," Carroll said on a media call.
Net debt grew by $5.8bn to $11bn by the end of its 2008 financial year. This includes the $5.3bn payment for the acquisition of a controlling interest in Anglo Ferrous Brazil, the purchase of more shares in subsidiary Anglo Platinum shares and planned capital expenditure.
Anglo is also paying $225m to 45% held De Beers as part of a $500m loan package to the world's largest diamond group by shareholders including the Oppenheimer family and the Botswana government.
Anglo has already told the market it is cutting capital expenditure by half this year to $4.5bn. Stay-in-business capital was cut by 64% to $1.3bn.
"In line with the group's revised production, growth and project development plans, worldwide headcount will be reduced by 19,000 by the end of 2009, achieved predominantly through a combination of natural attrition, scaling back contractor arrangements and redundancies," Carroll said.
"Cuts to production growth at existing operations reflect the weaker demand prospects, while further cost initiatives are under way at the corporate offices to reduce ongoing costs," she said.
Anglo Platinum, which is 78% held by Anglo, will cut output by 300 000 oz of refined platinum and thermal coal will be reduced by two million tonnes. A project to grow metallurgical coal production by 10% has been shelved. Diamond production will be cut "significantly", Carroll said.
Anglo sold some $1.68bn worth of assets during the course of the year. Its Tarmac assets are still on the block, but Carroll conceded that it was unlikely to be sold in the current weak economic environment.
Asked if there were any other assets for sale, Carroll offered a curt, "No."
The focus is on internal growth, she stressed, ruling out acquisitions. A rights issue is highly unlikely, said René Médori, Anglo's finance director.
Australian iron ore miner Fortescue has said it held talks with Anglo American, which conducted site visits to its assets.
"We compare on a regular basis our internal opportunities versus those that we assess on an ongoing basis externally. What we'll say today is based on those comparisons we think the internal growth prospects that we have are the most attractive," she said.
Médori said: "The actions we've taken in terms of cash flow preservation, the level of debt we have we don't believe we need to contemplate a rights issue. Our priority is internal in terms of productivity and cost saving improvements as well as delivering the three key projects that are in execution. I don't see external acquisitions as a key priority for Anglo."
- Miningmx.com
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