Anglo American Plc could cut its dividend for the first time since 2009 as tumbling commodity prices reduce the cash available to pay investors.
Analysts at Barclays Plc, JPMorgan Chase & Co. and Investec Ltd. have all said the company may make a cut when it reports first-half results next week, without specifying the scale of any reduction. Anglo, which spent $1 billion on dividends in 2014, hasn’t reduced the payout since it was halted during the global financial crisis.
The speculation underscores the challenge faced by Chief Executive Officer Mark Cutifani, who is seeking to almost double the company’s return on capital by improving mines and selling assets. He’s doing that at a time when prices for copper, iron ore, thermal coal and platinum, representing half of Anglo’s revenue last year, are trading in or close to bear markets.
Cutifani “has been dealt a very rough hand,” said Gavin Wood, the chief investment officer of Kagiso Asset Management in Cape Town, which manages $6 billion of assets, including Anglo shares. “They need to cut back on costs, on capital expenditure, preserve cash and weather it out.”
Shares of Anglo retreated 28 percent this year in London, compared with a 9.9 percent drop in the Bloomberg World Mining Index of 79 companies. The company is forecast by Investec to report negative free cash flow of $1.6 billion this year, more than double last year’s level.
The shares fell 17 percent on the day Anglo suspended the dividend in 2009.
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