After a flat 2003, global resources group Anglo American (Anglo) is set for a very strong 2004 financial year driven by strong gains in commodity prices and the possibility of a weaker rand, analysts say.
Given current commodity prices, Anglo could set record headline earnings per share for the year to December 2004. The group’s previous record was 125 United States cents set in its 2002 financial year.
In 2003 Anglo reported headline earnings per share of 120 US cents, down 4% from before.
Anglo was established in South Africa in 1917 and transferred its primary listing to the London Stock Exchange in May 1999.
BHP Billiton, one of Anglo’s two key rivals, last week reported record interim results.
Investment bank Merrill Lynch is currently forecasting Anglo’s headline earnings up 58% to 189 US cents per share for the 2004 year, while UBS expects a 61% increase in the group’s headline net earnings in 2004 due to higher coal, platinum and base metal prices.
“The outlook for Anglo’s earnings is strong and JP Morgan is forecasting strong commodity prices in 2004. We are also predicting a weakening in the rand later in 2004, all of which will be positive for Anglo’s earnings,” JP Morgan analyst James Wellstead said on Wednesday.
At 2.30pm on Wednesday, Anglo was quoted up 1,6% or R2,59 at R163,78 rand on the JSE Securities Exchange South Africa, while in London Anglo was quoted up 0,1% or one pence at 1 311 pence.
The 2004 outlook was positive for a number of the group’s commodities, Anglo said.
Improved economic growth in the US and Japan, combined with the strong industrial performance of China, was encouraging, the group added.
“After two decades of generally flat or declining real prices for metals, despite a background of steadily increasing demand, the backdrop for commodities is more positive than it has been for a number of years,” Anglo CEO Tony Trahar said.
“Although the potential for a further weakening of the US dollar remains a cause for concern, this is likely to be offset by rising dollar prices for our key commodities,” he added.
Strong Ebitda generation and good growth is likely for Anglo’s 2004 financial year, Trahar said at an investor presentation. — I-Net Bridge