BEN HIRSCHLER, London | Friday 7.00pm
PLATINUM and diamonds will add sparkle to Anglo American Plc profits when the mining group reports its first set of annual results as a London-listed company on March 22, industry analysts said on Friday.
But coal will be a drag, reflecting severely depressed prices which have sunk to their lowest ever levels in real terms, in sharp contrast to the booming ”precious” commodities in Anglo’s portfolio.
Analysts expect Anglo to unveil 1999 attributable profit before exceptionals of around $1.18 billion, up from $1.107-billion in 1998, with forecasts in a range $1.05-billion to 1.27-billion.
The outlook for 2000 is considerably brighter, as the full impact of an upturn in commodities is felt — but despite this, many analysts are wary of prospects for Anglo shares.
UK mining peers Rio Tinto Plc and Billiton both reported better than expected results last month, only to have their stock price mauled by a market with little time for ”old economy” stocks.
In Anglo’s case, investors will be looking beyond an expected upbeat statement on commodity markets for signs of further restructuring as the former South African conglomerate attempts to reinvent itself as a focused resources play.
The vexed issue remains of Anglo’s cross-holding with sister company, diamond gaint De Beers.
”They are likely to produce a sparkling set of results boosted by platinum and diamonds but they still haven’t got the share register opened up,” said Emil Morfett, mining analyst at JP Morgan. ”For many investors the key is breaking up the cross-holding structure with De Beers.”
De Beers said earlier this month that its 37% holding in Anglo remained core for now but that the stake could be available to fund future investment in the diamond business, although nothing was foreseen for now.
The cross-holding controversy aside, Anglo’s 33% stake in De Beers has proved a sound investment in the past year.
Analysts at Merrill Lynch expect the contribution from diamonds to Anglo’s 1999 earnings before interest and tax to surge by 79% to $265-million. Platinum will jump 52% to $503 million but gold is likely to dip 2% to $493-million and coal is set to fall 33% to $111-million, they predict. — Reuters