Anglo American has a job to exit post-BHP hole
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Karen Kwok
LONDON, July 25 (Reuters Breakingviews) -Duncan Wanblad’s job is not getting any easier. Two months after fending off Australian rival BHP’s BHP.AX $47 billion approach, the Anglo American AAL.L boss on Thursday delivered a decent set of half-year results. But a fire at one of Anglo’s prized steelmaking coal mines, and ongoing diamond problems, are cutting across something investors care more about: the group’s self-help plan.
The London-listed miner on Thursday reported $5 billion of EBITDA for the six months to the end of June, better than analysts’ estimates polled by Visible Alpha. Most of that was driven by iron ore and copper, with the latter churning out a 53% EBITDA margin, relative to 43% in the same period in 2023. But investors ought to be more focused on Wanblad's plan to sell or spin off assets including steelmaking coal, diamond, nickel and platinum, announced on May 14, and intended to persuade shareholders not to accept BHP’s offer. It’s not going that well.
A sale of the coal business is supposed to be the easiest part: the mineral remains integral to the steelmaking process, even if that’s no longer the case for electricity generation. A June 29 fire and explosion in the Grosvenor mine in Australia, which makes up a third of the valuation of Anglo’s steelmaking coal division according to Jefferies, has left a mess that is still being repaired. Wanblad said on Thursday he remained committed to selling the unit by early 2025, but given the uncertainty, potential buyers could ask for a discount, or only buy part of the portfolio. Analysts estimate the coal business could churn out over $970 million of EBITDA in 2025, polled by Visible Alpha. On the 3.8 times multiple of peers like Stanmore SMR.AX and Arch ARCH.N, it could be worth $3.7 billion – compared to previous hopes of $5 billion.
Wanblad may have to compromise on diamonds too. With supplies continuing to outstrip demand, Anglo announced a further cut in its De Beers’ 2024 production guidance to 23 to 26 metric carats from the previous 26 to 29 range. It’s uncertain whether the diamond market will see a material recovery by next year. A time-pressured sale would risk the unit being valued at the lower end of an eye-catchingly wide $3 billion to $7 billion range.
At the bottom of these valuation ranges for coal and diamonds, Anglo’s equity is worth roughly in line with BHP’s last $47 billion bid, according to a Breakingviews sum of the parts. As of Thursday, Anglo American shares also traded back to where they were before BHP’s interest emerged on April 25. If investors start to doubt Wanblad’s self-help plan, they may be more receptive to a return bid from BHP when that becomes possible again in December.
Follow @karenkkwok on X
CONTEXT NEWS
Anglo American on July 25 took a further $1.6 billion writedown on its fertiliser project in Britain as it takes more steps to cut costs after making a loss of $672 million in the first half.
The miner posted underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $5 billion for the six months to June 30, down from $5.1 billion a year earlier but above the $4.6 billion seen in an analysts’ consensus estimate.
Anglo cut its output guidance for steelmaking coal to between 14 million tons and 15.5 million tons from 15 to 17 million tons previously, as it battles an underground fire at its Grosvenor coal mine in Australia that started on June 29.
As of 0812 GMT, Anglo shares were trading at 22.01 pounds, down 0.9%.
Graphic: Anglo shares have fallen back to around their pre-BHP level https://reut.rs/3Wmsc2a
Editing by George Hay and Oliver Taslic
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
