First-half revenue from continuing operations was up 11% to $9.9bn driven largely by higher copper prices. Underlying cash profit (EBITDA) grew by 35% to $4.0bn, ahead of the $3.9bn expected. Stronger copper and, to a lesser extent, iron ore prices did much of the heavy lifting, partly offset by cost inflation and volume headwinds.
Free cash flow rose by $0.5bn to $0.8bn helped by operational performance and lower capital expenditure. Net debt of $8.2bn was $0.4bn lower than in December.
The interim dividend more than trebled, to $0.23 per share.
Operational guidance for 2026 was largely unchanged with a reduction in capital expenditure of $0.4bn to $3.2bn the notable exception.
The shares were up 4.4% in early afternoon trading.
Our view
Anglo American delivered a strong first half, but with guidance unchanged and the shares already trading well ahead of results, improved sentiment on the day was likely driven by rumours of progress on the disposal of troubled diamond miner De Beers. It’s unlikely to be financially transformational but would mark an important step in streamlining the business ahead of the merger with Teck, expected to be completed by March 2027.
Copper has been a key driver of recent profit growth, and the deal places it at the heart of the group, a direction we’re supportive of. The metal has a strong track record of structural demand growth. Themes such as electrification and the expansion of artificial intelligence infrastructure are already underpinning higher prices. At the same time, the supply outlook also looks supportive.
Anglo’s copper production is expected to improve in the second half as it works through operational challenges in Chile and Peru. Teck’s output has been improving helped by the ramp-up at Quebrada Blanca. With further assets coming on stream and mine lives being extended, the copper outlook is improving. However, significant execution risk remains.
Although copper is the main focus, the enlarged group will not be wholly reliant on a single commodity, with diversification coming from iron ore and zinc. The Woodsmith crop nutrients project also offers longer-term optionality, where bringing in development partners still appears the most likely path forward.
The scale of the merger has the potential to create value. Owning two major copper operations in proximity should open the door to material efficiency gains, including shared ore processing and site management. Realising these benefits, however, will depend on a smooth and disciplined integration.
Most major milestones to completion have now been cleared and, if the deal completes, Anglo shareholders are set to receive a one-off payment of $4.19 per share, with the possibility of a further distribution if the De Beers spin-off proves successful. Beyond that, we expect the group to continue paying modest dividends. A step-change in payouts looks unlikely, and, as ever, there are no guarantees.
Anglo’s portfolio progress and leverage to higher copper prices have helped rebuild investor confidence. But with a significant deal premium now reflected in the valuation, we think the scope for near-term upside is limited.
We’re positive on the prospects for the combined group, but any last-minute setbacks could quickly hurt sentiment. Even if the deal completes smoothly, commodity price exposure means that investors should expect volatility, with successful integration likely to be a key driver of longer-term returns.
Environmental, social and governance (ESG) risk
Mining companies tend to come with relatively high ESG risk. Emissions, effluences and waste, and community relations are key risk drivers in this sector. Carbon emissions, resource use, health and safety, and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, Anglo American’s management of material ESG issues is strong.
Climate targets include carbon neutrality across operations by 2040. There are also targets for a 30% improvement in energy efficiency and a 50% reduction in freshwater withdrawal against 2016 levels in water scarce areas by 2030. There is a strong renewable energy programme, which is expected to fully meet energy needs in Chile, Brazil, Peru and South Africa. The merger with Teck potentially brings exposure to additional ESG risk, but we’re pleased that Sustainalytics views Teck’s management of the issues as amongst the strongest in the industry.
Anglo American key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember that yields are variable and not a reliable indicator of future income. Keep in mind that key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.