| Anglo American Works to Restore Its Balance Sheet to Health | |
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Anglo American's New Survival Strategy: What Do Investors Think? (Continued from Prior Part) Restoring balance sheet
Anglo American’s (AAUKY) balance sheet is in very bad shape. This is one of the major drivers that has led the company to take drastic steps to realign its focus on cash-flow generation, high-quality assets, and cost reduction.
The company is targeting a net debt reduction in 2016. Anglo American has also reiterated its net debt guidance of $13–$13.5 billion for the end of 2015, despite commodity price pressure. This, it said, is a result of cost savings.
Anglo American has taken several steps to reduce its net debt, including the following:
- Reduction in capital expenditure: AAUKY has revised its capital expenditure downward by an additional $1 billion for 2015 and 2016. This reflects the current portfolio and disposals announced by the company. Also, its major projects are nearing completion, which will necessitate lower growth capital spend going forward.
- Suspension of dividend: Anglo American has suspended its dividends (DVY) for the balance of 2015 and 2016. Upon resumption, the policy will be changed to one based on a payout ratio rather than a progressive dividend policy. This change was made to provide flexibility through the cycle. Other commodity producers, including Freeport-McMoran (FCX), Glencore (GLNCY), and ArcelorMittal (MT) have also suspended their annual dividends.
- Disposals: A total of $2 billion worth of asset disposals have been agreed on for the company to date. Targeted disposals have increased to $4 billion.
While the company intends to maintain its investment grade rating, it has said that the cost of its debt will not be materially impacted, even if the rating drops below investment grade.
Maintaining liquidity
Anglo American’s liquidity will be close to $15 billion at the end of 2015, which is similar to its end-2014 level. This liquidity will include cash in excess of $7 billion.
While there is still liquidity on Anglo American’s balance sheet, a weak commodity price outlook could mean negative free cash flow for longer, worsening leverage ratios further. This is the main concern for investors right now, which brings them to the question of whether more drastic measures—such as a potential equity raise—are needed in the future.
Potential equity issue
On being asked a question about a potential equity raise, Anglo American’s management maintained that they are taking steps such as cost reduction, dividend suspension, and portfolio restructuring to help the company through this tough commodity price environment.
However, as seen in the negative share price reaction following Anglo American’s investor day, investors still seem to be concerned.
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Anglo American plc
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PRODUCTEUR |
CODE : AAL.L |
ISIN : GB00B1XZS820 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Anglo American est une société de production minière de nickel et de zinc basée au Royaume-Uni. Anglo American est productrice de nickel, de zinc, d'argent, de chromium, de cuivre, de manganese, de molybdène, d'or, de platine, d'uranium et de zircon au Bresil, au Canada, au Chili, au Perou, au Venezuela, en Australie, en Afrique Du Sud et en Namibie, en développement de projets de charbon, de cuivre, de molybdène et d'or en Afrique Du Sud, et détient divers projets d'exploration au Bresil. Ses principaux projets en production sont RUSTENBURG SECTION, MAMATWAN, MPONENG (WESTERN DEEP NO. 1 SHAFT), TAUTONA (WESTERN DEEP NO.3 SHAFT), MARIKANA, WESSELS et PALABORA MINE AND SMELTER en Afrique Du Sud, COLLAHUASI MINE, MANTOS BLANCOS et MARICUNGA au Chili, CODEMIN au Bresil, NAVACHAB MINE et SKORPION MINE en Namibie, LOMA DE NIQUEL au Venezuela, GEMCO en Australie, QUELLAVECO au Perou et CALLINAN MINE au Canada, ses principaux projets en développement sont ZONDAGSFONTEIN et PEBBLE en Afrique Du Sud et ses principaux projets en exploration sont LISHEEN et RATHDOWNEY TREND / MOATE en Irlande, SAN FERNANDO et PINABETE au Mexique, 777 PROJECT, BAY PAINE, NUVILIK, MUSKOX, RIVER VALLEY, RAGLAN / BELANGER et WEST RAGLAN au Canada, BOYONGAN (NORTH) aux Philippines, RAKKURIJARVI en Suede, ATASPACA et ANTAY au Perou, KOLWEZI en Republique Democratique Du Congo, SALOBO et ARIPUANA / AREX au Bresil, PLATREEF et SPITZKOP ZINC en Afrique Du Sud et ZAMBEZI en Zambie. Anglo American est cotée au Royaume-Uni, aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 2 743,2 milliards GBX (3 281,7 milliards US$, 2 874,8 milliards €). La valeur de son action a atteint son plus bas niveau récent le 12 mai 2017 à 1 001,00 GBX, et son plus haut niveau récent le 28 mars 2024 à 1 951,80 GBX. Anglo American possède 1 405 465 000 actions en circulation. |