Anglo results surprise on the upside

This morning we have results from perhaps the most well known South African company, at least inside of our borders. The one founded by a German who worked in London. And then moved here, after getting his first job in the diamond business in London, a place called Dunkelsbuhler & Company. And the money to fund the business came in part through involvement from JP Morgan. The funders, the original shareholders you stumped up 1 million pounds were from the old world in the United Kingdom and the new world, the USA. Hence the name.


But let me put one thing straight here, the Anglo American that you know today is and was not the Anglo from 15 years ago. Anglo industrial side of their business has been slowly unbundled, Tongaat Hullet, Highveld Steel, Mondi, they owned a big chunk of what is today FirstRand, they owned media assets, what is Times Media today. Byron points out of course they owned a large chunk of AngloGold Ashanti and Gold Fields. They also owned motor vehicle assets. They owned a lot, I have probably forgotten a lot in there too. So that is what I mean, they are not the company that we know today, which is not an industrial and mining company, but rather just a mining company. But, both Rio Tinto and BHP Billiton have comfortably outperformed Anglo American since June of 1999. I remember there was a time when Anglo was the biggest. No more. They are now the hunted, perhaps we will see a merger of not so equals at some stage with the Xstrata/Glencore merged entity.


But history aside, let us look at these numbers. We have seen most of the results of the listed entities that they own, but there were still surprises, the analyst estimates were well short of what the company actually managed to produce, even if the at face value number looks slightly worse for wear. Underlying profits decreased 44 percent to 6.2 billion Dollars. On a per share basis the company earned 2.26 Dollars per share, the interim dividend declared was 32 US cents. The company has even recommended a 53 cents final dividend, bringing the full year dividend to 85 US cents. At the average exchange rate of 8.21 to the US Dollar that comes to full year earnings of 18.55 ZAR and a dividend of 6.98. So, at the current share price, 282 and a half ZAR, the earnings multiple is 15 times plus and the yield is around 2.5 percent in Rand terms. But, the stock is priced for recovery, not for disaster anymore. Is the worst past? Gee, I still think that Amplats issues are a long way away from being resolved. The Eskom price hikes, after being promised no further material hikes last year, well, look what happened. I shall read more on the weekend of these results, but a slightly better than anticipated result means the stock gets more than a little relief today, up three percent plus in London.