Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Anglo profits surge but no special dividend for shareholders

Anglo American reported a 14% increase in operating profits on revenue up 11% to .5bn but the company ignored a growing clamour from investors for an extra payout

Mining giant Anglo American has angered some shareholders by failing to pay out a special dividend despite reporting record profits of .1bn (£7bn).

The FTSE 100 company, which operates dozens of mines across the world from Alaska to Tasmania, reported a 14% increase in operating profits on revenue up 11% to .5bn. But the company ignored a growing clamour from investors for an extra pay out.

It comes as Anglo faces a potential threat from the merger of rival Xstrata with the controversial commodities trader Glencore.

“Anglo has the strongest balance sheet and highest free cash flow yield of the majors, yet had the weakest dividend increase and lowest payout ratio,” said Christopher LaFemina, analyst at Jefferies. “While Anglo shares should be good value, we are somewhat concerned about the company’s lack of capital returns.

“This lack of capital management begs the question: wWhat does the company intend to do with its balance sheet and free cash flow?”

Rene Medori, Anglo’s finance director, said the company’s ambitious investment pipeline, which includes bn of possible projects, meant it was not appropriate to pay a special dividend. Instead the company increased the final dividend payment by 15% to 46¢ a share, slightly ahead of expectations.

Anglo plans to spend about bn this year, including .1bn alone on its Rio Minas iron ore project in Brazil which will include a 522km iron concentrate pipeline, the world’s longest.

Last November Anglo agreed to pay .1bn to increase its stake in diamond miner De Beers to 85% by buying out the Oppenheimer family. Diamond prices jumped by more than a third last year, which helped De Beers report a 62% rise in profits last year to 8m.

Cynthia Carroll, Anglo’s chief executive, played down takeover rumours surrounding the miner’s future following the proposed merger of Glencore and Xstrata. If the “Glenstrata” deal goes ahead it will push Anglo down to sixth place in the world ranking of mining companies. “We have a very clear growth strategy that we set out … and we are delivering on that strategy,” she said.

Millionaire factory

The fantastic wealth of the elite group of traders running Glencore has been thrust into the spotlight again after the commodities trader nicknamed the “millionaire factory” disclosed the names of another seven employees who hold stakes worth more than £300m.

Regulatory filings show Gary Fegel, its head of aluminium, holds a 2.24% stake in the company valued at more than bn. He joins Ivan Glasenberg, Glencore’s chief executive, and five other partners in the company’s dollar “billionaire club”.

The other six who hold a stake of 1% or more are Chris Mahoney, head of agriculture and a British rower who won a silver medal at the 1980 Moscow Olympics; Steven Blumgart, co-head of aluminium; Nick Popovic, head of its Kazzinc subsidiary; Christian Wolfensberger, director of iron ore; Stuart Cutler, the head of ferrochrome; and Luis Alvarez, an oil trader. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds