Anglo American Shares Plunged 7.9% on Weak FY24 ’25 Guidance

The Anglo American plc (LON: AAL) share price plunged 7.88% after a performance update for the 2023 financial year accompanied by guidance for fiscal years 2024, 2025 and 2026. The mining giant confirmed that it expects production to fall by about 4% in 2024 and 3% in 2025. However, production will increase by 4% in 2026. 

During the 2023 fiscal year, the company anticipates production will rise by approximately 3%. The increase is primarily attributed to the Quellaveco copper ramp-up and robust iron ore production. However, it is somewhat offset by lower ore grades in Chile and reduced production of platinum group metals (PGMs) and diamonds.

The company expects Unit costs in 2023 to increase by around 5%, with the uptick primarily driven by the Consumer Price Index (CPI) and mining inflation factors, with some adverse impacts on production.

The firm’s effective tax rate is estimated at approximately 39%. This increase is due to a shift in the profit mix towards higher tax jurisdictions. Capital expenditures (Capex) will total approximately $5.8 billion, which reflects a slight reduction of approximately $0.2 billion due to prioritisation efforts.

For fiscal year 2024, production is expected to decrease by approximately 4%. This reduction is part of a strategic rescheduling to optimise value and lower unit costs. Unit costs are expected to decrease by about 2%. This decrease is primarily due to enhanced cost discipline, which more than offsets inflationary pressures.

For the fiscal year 2025, production is anticipated to decrease by a further 3%. The reduction results from production adjustments aimed at enhancing overall value and reducing unit costs, as well as scheduled maintenance activities.

Duncan Wanblad, Anglo American’s CEO, said: “The prospects for mined products have rarely looked better. In the near term, given continuing elevated macro volatility, we are being deliberate in reducing our costs and prioritising our capital to drive more profitable production on a sustainable basis.  We are focused on what we can control – safety, operational discipline and capital allocation.  We are confident in our actions to sustain the competitiveness of our world-class assets and deliver on our outstanding growth opportunities in the metals and minerals that are so critical now and for generations to come.”

Anglo American (AAL) share price chart. 

The Anglo American share price plunged 7.88% to trade at 2049.3p from Thursday’s closing price of 2224.5p.