Anglo American holds back dividend over £7bn debt

Anglo American today became the only mining giant this year not to restore its dividend because of balance-sheet pressures.

Anglo American's peers, specifically Xstrata — which last year made an unsuccessful hostile bid for Anglo — and Rio Tinto have restored their dividends. But Anglo, with net debt of $11 billion (£7.1 billion), opted to wait as it published its full-year results for the year to 31 December.

It cancelled dividends when it published its 2008 results, and chief executive Cynthia Carroll explained that a "release of equity" would have jeopardised the company's rating. She said Anglo would return to paying dividends for the present financial year.

Anglo's shares dropped 81½p to 2420½p on the news despite Carroll being optimistic about the firm's prospects in Asia. The Far East is the major consumer of Anglo's copper, coal and iron ore and she predicted that demand in the region would grow by nine per cent to 9.5 per cent adding there was "continued strength in the market on the back of emerging countries".

On the jobs front, Carroll showed that she could live up to her nickname of Cyclone Cynthia with the way she swept through the company. In October, Anglo said it would be removing a layer of management by forming seven business units. Today, Carroll said that in the past year "group restructuring and efficiency initiatives resulted in a reduction of 23,400 to our total headcount".

Analysts at Panmure Gordon hailed Anglo's results, with group operating profit down 50.6 per cent to $4.5 billion (£2.9 billion) and underlying profits off 41.5 per cent to $6.9 billion "well above our $6.5 billion estimate".

On delays in the Tarmac sell-off to Eurovia for $400 million — part of Anglo's disposal of non-core assets — Carroll said: "I'm very pleased with the level of the divestiture — we're not going to give Tarmac away."

She also said the Minas Rio iron-ore project in Brazil had grown to five billion tonnes from 1.25 billion: "It is a very, very attractive project and we will continue to assess [whether we engage a partner]."