Anglo American Share Price Dips Ahead Of Earnings Report

on Jul 25, 2013
Listen Thursday, July 25th: Anglo American’s (LON:AAL) share price has fallen almost four percent today as investors await the UK-based company’s interim results, to be released tomorrow. New Chief Executive Officer Mark Cutifani is due to unveil his strategy for the underperforming mining group.

According to Anglo’s estimates, for the six months to the end June, the company is expected to report a more than 16 percent drop in underlying operating profit to $3.12 billion, with earnings per share tipped to fall almost a third to $0.93. But the group’s mixed quarterly production figures released last week (Anglo American Share Price Falls on Mixed Q2 Output Results) weighed on market participants’ forecasts and the average estimate of four analysts surveyed by

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Bloomberg News, has pointed at much weaker performance, projecting a 31 percent plunge in underlying profit to $1.17 billion.
**Focus on Cutiffani’s Strategy**
Anglo, whose stock value fell by 25 percent between 2007 to 2012, as compared to a 130 percent gain in rival BHP Billiton’s (LON:BLT) shares, has significantly underperformed most of its mining peers. And while earnings remain an important indicator for the company’s prospects, most analysts anticipate tomorrow’s focus to be on the results of Cutifani’s review of the business and any hint of a plan to redress its underperforming shares, including potential solutions to long-standing problems like South African platinum and Brazilian iron ore. At an annual shareholder meeting in April, the CEO attributed Anglo’s woes to a “lack of capital discipline, a lack of focus on returns and incapacity to translate good intent into business results.”

According to a research report from brokerage Macquarie First South Capital released to clients this month, Cutiffani’s reign “has to be the era of shareholder value” to “pay back Anglo shareholders for the last five to six years of value destruction”. The new CEO’s focus should be on upgrading Anglo’s portfolio of assets to ensure higher returns on capital employed, the report noted. Analysts who have long berated the company for poor spending decisions, have also said they expect clarity on cost savings.

**Silicosis Claimants Turn to South African Courts**
!m[Miner Wins UK Ruling over South African Miners’ Claims](/uploads/story/4328/thumbs/pic1_inline.JPG)
In a separate development, London’s High Court yesterday ruled that it had no jurisdiction over a lawsuit against Anglo American South Africa brought by miners who contracted the deadly lung disease silicosis when they worked for the unit in South Africa.

UK law firm Leigh Day, which represented the 2,336 miners said in a statement yesterday that many of them planned to file papers in the next few days in South Africa seeking damages against Anglo American.
**Anglo American Share Price Down Almost 4%**
The Anglo American share price has fallen significantly today. At 10:45 BST, the stock stood at £1,383.00p, 3.82 percent below the previous session’s closing level.
According to AnalystRatingsNetwork data, currently, three research analysts have rated Anglo’s shares with a “sell” rating, 12 have assigned a “hold” rating and seven have a “buy” rating. Thus the stock average rating is “hold” with a consensus price target of £1,764.60p.


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