Anglo American Reports Significant Loss and Dividend Cut

Anglo American reports a substantial loss for fiscal 2024 amid lower revenues. The proposed final dividend cuts significantly from last year, which could negatively impact investor sentiment.

Date: 20-02-2025

AI Rating: 4

Summary of Financial Performance
Anglo American Plc reported a noteworthy loss in fiscal 2024, amounting to $3.07 billion, a steep decline from last year's profit of $283 million. This drastic shift in financial performance, particularly the loss per share of $2.53 compared to last year's profit of $0.23, signals significant challenges facing the company.

The report indicates that revenue decreased by 11 percent, dropping from $30.65 billion to $27.29 billion. Such a decline in revenue often results in negative stock price movement, especially as it may signify ongoing operational difficulties. Additionally, the EBITDA margin saw a slight decrease, falling to 30 percent from 31 percent. This reduction in profitability metric emphasizes the financial pressures confronting Anglo American.

Dividend Implications
Another critical factor affecting investor sentiment is the proposed final dividend of $0.22 per share. This represents a 46 percent decrease from last year’s dividend of $0.41 per share, resulting in a total dividend for 2024 that is 33 percent lower than that of the previous year. Dividend cuts generally create apprehension among investors as they may indicate the company is retaining cash due to financial constraints, which can lead to reduced attractiveness of the stock.

Production Challenges
The report highlights production challenges, with a 7 percent decrease in production volumes, particularly from Platinum Group Metals, alongside a 6 percent reduction in copper production. Such production decreases can hinder revenue growth and affect future profitability, thereby impacting stock prices. In contrast, a 1 percent increase in iron ore production is noted, but it is insufficient to offset the overall declines seen in other core materials.

Joint Mining Plan
On a more positive note, Anglo American announced a partnership with Codelco to implement a joint mining plan which may enhance copper production with minimal additional capital outlay. This initiative could potentially lead to improved future performance; however, details are still in the planning stages with agreements expected to be finalized by late 2025. Investors will likely remain cautious until tangible results from this collaboration are realized.

Stocks: AAUKY AAL