AAL Anglo American Plc

By Scott Patterson 

LONDON-- Anglo American PLC swung back to profitability last year amid the rebound in commodity prices, after the miner enforced one of the most sweeping structural changes a global corporation has seen in years.

The results will be a reprieve for Chief Executive Mark Cutifani, who last year unveiled a plan to cut Anglo's workforce by more than half and pare back its operations to just 16 assets from 45,

But Mr. Cutifani on Tuesday said he now expects to retain about 30 mining operations, including its Minas-Rio iron ore mine in Brazil.

"This is not the company that you knew back three years ago, we've streamlined, we're a lot fitter, and we've still got a long way to go," Mr. Cutifani said on a conference call with reporters. "I make no apologies for turning Anglo American into the machine it is today."

The U.K.-listed miner reported net income of $1.6 billion for the year ended Dec. 31, 2016, compared with a net loss of $5.6 billion the previous year. Revenue was largely unchanged, rising to $23.1 billion last year from $23 billion a year ago.

Anglo's net debt fell to $8.5 billion by year-end from $12.9 billion at the end of 2015, as higher commodity prices and asset sales brought some relief to the mining giant's balance sheet.

Mr. Cutifani said Anglo American doesn't expect to sell any more operations to repair the company's balance sheet, but remains open to offers, especially for some of its struggling South African coal businesses.

"The extent of deleveraging should give confidence in Anglo's renewed financial strength," Sanford C. Bernstein analyst Paul Gait said in a note.

Shares of Anglo American gained 1.5% in early London trading. Its shares are up 216% in the past year.

As with many of its peers, the company has suspended its dividend and was putting some of its biggest assets on the block for sale. Reiterating previous forecasts, Mr. Cutifani said Anglo American expects to reinstate its dividend for 2017 this time next year.

Anglo American now appears to be shifting away from a plan to focus on three commodities--copper, platinum and diamonds--and divest most of its money-losing coal and iron ore businesses. A rally in coal and iron ore prices in 2016 has changed the playing field.

Now, Anglo is focusing on improving production and productivity at its coal and iron-ore businesses.

Mr. Cutifani expressed reservations about whether last year's surge in prices will continue. While Anglo's iron-ore and coal businesses "are making a great contribution," he said, "I have to say we don't think these prices will hold up in the long term."

Anglo's return to profitability highlights how volatile commodities have become, especially in China, where sudden shifts in demand have roiled markets in recent year.

Mr. Cutifani said the company's focus won't be on specific commodities. Rather, it will look to hold low-cost assets that can survive volatile swings in prices.

'There are no bad commodities, only bad projects," he said.

Write to Scott Patterson at scott.patterson@wsj.com

(END) Dow Jones Newswires

February 21, 2017 04:35 ET (09:35 GMT)

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