Anglo fails to resume dividend

Two rivals -- Xstrata and Rio Tinto -- resumed payouts last week, having suspended them to save cash during the downturn.

Anglo Chief Executive Cynthia Carroll on Friday noted rivals that have resumed dividends also raised funds last year by share issues that were dilutive to shareholders.

"Unlike our peers we did not resort to issuing equity and we also have competing needs. We're funding highly attractive projects, we're maintaining our credit rating and rebuilding our capital position," she told a conference call.

"The resumption of the dividend at the earliest possible time remains a key priority for the board," Anglo said.

Carroll said Anglo, the fourth-biggest diversified mining group by market capitalisation, would review its dividend policy before issuing half-year results in August, basing its decision largely on commodity prices.

Although there were "headwinds" due to uncertain recovery in the west, Carroll said the near-term outlook for Anglo was strong.

"I'm not terribly worried because our copper, iron ore and coal products are largely going into Asia ... For our commodities we think there is continued strength in the market on the back of the emerging countries."

SHARES DIP

Anglo's shares fell 1.9 percent to 2454.5 pence by 0935 GMT, underperforming a 1.3 percent decline in the UK mining index <.FTNMX1770>. Last year, they gained 75 percent but lagged the UK mining index by 16 percent.

Most analysts had forecast that Anglo would not pay a 2009 dividend, but some had hoped that it would surprise investors.

Analyst Michael Rawlinson at Liberum Capital said better- than-expected profit outweighed the lack of a dividend.

"Overall, the operational performance was stronger than we expected," Peter Malin-Jones at Goldman Sachs said in a note.

Anglo posted underlying EPS of 214 cents for 2009, down 51 percent from 436 cents the previous year, on 25 percent lower revenue of $24.6 billion (15.9 billion pounds).

This was 8.6 percent better than the consensus estimate of 197 cents a share on revenue of $22.59 billion, according to the forecast of 20 analysts polled by Thomson Reuters I/B/E/S.

According to StarMine's SmartEstimates, which places more weight on recent forecasts by top-rated analysts, the estimate was for a profit of 202 cents.

Anglo said it delivered $1.6 billion of cost savings in 2009, more than the $1 billion that was promised, as part of its target of $2 billion by 2011.

A key reason for not resuming dividend payments was that funds were needed to pay for building new mines, such as the Minas Rio iron ore project in Brazil, where the costs for the initial phase jumped to $3.8 billion from $2.7 billion.

Carroll said it was still looking at the possibility of bringing in a partner to help fund the mine.

"This is a very, very attractive projects and we have been approached by quite a number of partners from around the world. We haven't taken a decision on that but we will continue to assess that."

(Reporting by Eric Onstad; Editing by Paul Hoskins and Erica Billingham)