Anglo full year numbers

Anglo American have released their full year numbers this morning and it looks like a comfortable beat to me. In fact Byron tells me that it was a beat. Good for them. Good for their shareholders and management who have had to battle the media and shareholder criticism, they must be feeling a whole lot better about life. The stock is up two percent plus here this morning. But with record results, their best ever, the stock is around 230 Rands away from the all time high. Go figure! I can see that the stock clocked 556 Rand in the second half of June 2008. The stock trades at 326.50 Rand a share. So, back then the stock was completely stretched, now it is very cheap.

Group revenue increased by 11 percent to 36.5 billion US Dollars. Record underlying earnings of 6.1 billion Dollars (that is US of course) translated to 5.06 Dollars worth of earnings per share. Total dividends for the year were 74 US cents, creeping back up, but perhaps not anywhere near where shareholders would want it to be.

Almost all of the divisions performed well, Iron Ore and Manganese increased operating profits by 23 percent, Metallurgical Coal increased their operating profits by 52 percent, Thermal coal increased operating profits by a whopping 73 percent. Copper operating profit was 13 percent lower, diamonds operating profit was 33 percent higher than in 2010. As Anglo puts it, owing to significant price increases in diamonds. Three major projects were delivered in 2011, Barro Alto, Los Bronces and Kolomela, which was long before schedule. Which in mining terms is amazing. Minas-Rio (iron ore project in Brazil) is progressing well. I must be honest, I know some folks who know mining a whole lot better than I do, and they do not think that this is progressing as well as Anglo says.

The outlook section is interesting, "Despite short term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American's diversified mix of commodities remains strong. Sustained growth in the emerging economies should underpin robust demand for commodities, albeit with a degree of short term volatility, while the signs of economic recovery and stimulus in the US should provide a further fillip."

I think that is bang inline with our thinking for the short term and the longer term outlook is exactly the same as ours too! Check it out:

"Rapid 'catch-up' in living standards, notably in China and India, combined with a medium term need for infrastructure replacement in the developed countries, present an attractive proposition for the early cycle commodities. Over time the considerable scope for an expanding middle class in many emerging economies should boost consumption, which positions Anglo American well due to its breadth of unique mid to late cycle exposure from copper and nickel to platinum and diamonds"

And to be perfectly honest, at current growth rates it is still going to take an absolute age for China and India to catch up to the developed world. Perhaps in the next eighty years. That is how far we are away. On balance good numbers. Great numbers. Check out the recent presentation, hot off the presses: PRELIMINARY RESULTS YEAR ENDED 31 DECEMBER 2011. But the question still remains, why does the stock trade on record results at such a lower price than where they were in the go, go days?