Anglo American Plc’s chief executive officer said a rout that’s sent commodity prices and the mining company’s shares to the lowest since 2002 will worsen in the second half as demand softens.
“It will probably get tougher in the second half than it has been in the first so there are concerns,” Mark Cutifani said Friday in an interview on Bloomberg Television. “Right across that space we think the next six months are going to be pretty tough.”
The commodities slump has undermined Cutifani’s efforts to turn around the fortunes of a business that mines platinum and diamonds in Africa and iron ore in Brazil. To preserve cash, Anglo plans to sell coal, platinum and copper assets and intends to reduce its workforce by more than a third.
The London-based company reported first-half underlying earnings sank 30 percent to $904 million. That still beat the median analyst estimate of $663.5 million. Anglo kept its dividend, saying it would sell more assets if needed to sustain the payout while also warning of plans to eliminate 6,000 more jobs.
Anglo shares fell 3.5 percent to 778 pence in London to close at an almost 13-year low after earlier rising 4.4 percent. The stock is down 35 percent this year. The Bloomberg Commodity Index of 22 raw materials slumped 28 percent in the past year.
“We’ve seen continuing declines in the prices for our commodities,” Cutifani said in an interview posted on the company’s website. “We have to continue to accelerate the improvements to battle against those headwinds.”
The company, which previously flagged the sale of a number of assets to raise $3 billion, will consider disposing of other mines if needed to get that target, he said.
“There’s clearly a lot of reshuffling and cost-cutting yet to come but we think it will remain an uphill struggle for Anglo against the backdrop of cascading commodity prices,” said Cailey Barker, an analyst at Numis Securities Ltd. in London.
Anglo sales declined 17 percent to $13.3 billion for the first half. It reported a $3.02 billion net loss compared with a $1.46 billion profit a year earlier after writing down the value of its Minas-Rio iron-ore mine in Brazil and coal assets in Australia. Net debt rose by $600 million to $13.5 billion.
“We are unrelenting in enforcing strict cost and capital discipline,” Cutifani said in a statement. “Now is the right time to accelerate the right-sizing of the organization that supports the future business.”