Are rallying commodities the sole reason for Anglo American’s profit surge?
Anglo American’s profit more than doubled in 2016, and with most commodities rebounding, it is easy to guess why. But the earnings surge has little to do with metals prices. These charts explain the moves: 1. While the Bloomberg commodities spot index rose 23% in 2016, prices for the raw materials that Anglo American produces dropped 3%, after weighting for the company’s output. 2. Cost savings, rather than commodity prices or production growth, were the biggest contributor to Anglo’s 25% rise in earnings. 3. Employees have been among the hardest hit by Anglo’s cost cutting, with headcount falling by 67,000 from 2013 to 2016. About one-third of those workers left the company when Anglo sold the operations where they worked. 4. Even after the paper mills, car factories and newspapers of its past were offloaded, CEO Mark Cutifani inherited a sprawling empire of mining assets scattered across the world when he took the CEO role in 2013. Cutifani closed and sold high-cost operations to ...
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