Anglo American Share Price Rose 5.44% Amid Lower FY ’23 Profits

The Anglo American plc (LON: AAL) share price rose 5.44% after announcing its annual results for 2023. The mining conglomerate announced a significant reduction in its annual dividend, cutting it by 50% following a sharp decline in profits for 2023, attributed to impairments and downturns in the platinum and diamond sectors.

In response to these challenges, Anglo American is embarking on a strategic cost-cutting initiative to reduce its annual operational expenses by $1 billion and capital expenditures by $1.6 billion over the coming three years. This strategy includes eliminating non-profitable production to navigate through periods of elevated cost pressures effectively.

For 2023, the company reported an underlying EBITDA of $9.96 billion, marking a 31% decrease from the previous year. This decline was primarily due to a mere 2% increase in production, which did not offset the significant fall in mining EBITDA margins from 47% to 39%, coupled with a 13% decrease in the average price of its product basket and a 4% rise in unit costs.

Moreover, Anglo American recognised a $1.6 billion devaluation in the book value of its diamond division, De Beers, mainly about goodwill. This adjustment reflects the company's revised expectations for global GDP growth and consumer demand. 

Additionally, a $0.8 billion impairment was recorded for its nickel operation, Barro Alto, in 2023, following adjustments to the asset's long-term pricing and cost projections. Profit attributable to equity shareholders drastically fell to $283 million, down from $4.51 billion in 2022, while revenues decreased by 13% to $30.65 billion.

The company has decided on a final dividend payout of 41 cents per share, representing a 45% decrease from the previous year, leading to an annual dividend of 96 cents, a sharp decline from 198 cents.

Duncan Wanblad, Chief Executive of Anglo American, said: “2023 saw us increase production by 2% and contain the effect of high inflation on our costs while facing a cyclical downturn in PGMs and diamonds. Against that backdrop, we are reducing annual run rate costs by $1 billion and capital spend by $1.6 billion over the next three years while also cutting out unprofitable volumes. We are systematically reviewing our assets and will take further actions as needed to ensure their competitiveness.”

Anglo American share price. 

The Anglo American share price rose 5.44% to trade at 1813.2p from Wednesday’s closing price of 1719.6p.