Anglo American released a blockbuster set of results for the year to year to December 2021 on the back of sustained demand for commodities such as copper and Platinum group metals. These commodities are a significant feature of global de-carbonisation efforts, and with bulk commodities such as iron ore being essential for infrastructure developments.
On the flipside, supply-side growth has been constrained by the lack of new greenfield projects as well as a tight regulatory operating environment. These factors have resulted in major delays for new projects being completed.
Robust cash generation from operations resulted in a $20.6 bn inflow compared to $8 bn in 2020. Meanwhile, free cash flow grew from $1.2bn to $7.8bn. The return on capital employed of 43% was way above the target of 15% through the cycle.
The company stated that they were committed to capital discipline, and to maintaining a strong and flexible balance sheet. This is a major positive factor when operating in a cyclical commodity business.
One of the most important and significant measurements of the financial strength of Anglo American was the net debt of $3.8bn, which is a paltry 0.2x underlying EBIDTA. The EBITDA margin of 56% is also a very impressive feature of its financial prowess.
In addition to a proposed final dividend of $1.18, a special dividend of $0.50, as well as the interim special dividend of $2.51, has resulted in a bonanza dividend pay-out of $4.19, excluding the share buyback of $0.80.
A strong pipeline of new projects, such as the new copper venture in Chile which will become operative in mid-2022, will be a positive for the further diversification of the commodity portfolio of the Anglo American group, as well as various brownfields expansion operations.