Equities Update: Anglo American, Rio Tinto, Centrica, Glencore, BAE Systems…

Anglo in transition with merger on the way

Adam Vettese, market analyst for eToro, says: “Anglo American’s full year results tell a story of steady stabilisation for a miner in transition, showing gritty operational progress amid portfolio pruning, setting the stage for bigger ambitions via the advancing Teck merger. Earnings from continuing operations edged up with EBITDA up 2%, powered by stellar 49% copper margins and 43% from premium iron ore, while nailing $1.8 billion in cost savings and strong 107% cash conversion trimmed net debt to $8.6 billion.

“That said, the group’s total earnings remain well below 2023 peaks after shedding coal and nickel, capex eats over $2.5 billion in cash yearly, and fresh De Beers writedowns highlight past allocation missteps. These numbers now bridge to the Teck deal, post Canadian approval and shareholder backing, which will promise $800 million synergies, a top-tier copper giant, and a Vancouver HQ to turbocharge growth.

“For investors, it’s a leveraged copper bet, though merger execution and commodity swings will decide the fate. Shares have opened positively this morning and could be primed for further upside if Teck seals smoothly in 12-18 months and copper rallies, although any China jitters could stall that.”

Rio dips as investors left wanting from full year update

Adam Vettese, market analyst for eToro, says: “Rio Tinto’s full year numbers are solid operationally but short on earnings fireworks. Copper-equivalent production climbed 8%, with copper output up 11% thanks to the Oyu Tolgoi ramp up, while EBITDA rose 9% on tighter costs and higher volumes. Management held the dividend steady at $6.5bn, the tenth year at the top of the 40-60% payout range, but there’s no buyback boost to excite shareholders like other sector peers.

“On the downside, underlying earnings were flat, net profit down 14%, and free cash flow off 28% as capex and provisions bit. Iron ore still dominates earnings, so China risk lingers even as copper and aluminium grow.

“Investment wise, shares have had an incredible run, and we are seeing some profit taking this morning following this update. That said, Rio Tinto is still a high-quality dividend play with copper-led growth potential, trading on a reasonable multiple, although a China stumble could cap gains. Patient holders will like the yield; traders may wait for a dip.”

Centrica hits pause on buybacks as profits cool

Mark Crouch, market analyst for eToro, says: “Centrica has delivered a sharp reminder that energy markets giveth, and they taketh away. Profits have cooled drastically from last year’s extraordinary highs, as trading conditions normalised and infrastructure earnings felt the pinch of lower prices and nuclear outages, prompting management to pause share buybacks. Yet the market may take some comfort from the fact that profits still beat expectations, underlining a degree of resilience in a far less forgiving energy backdrop.

“Retail proved steadier than many feared, while Home Services continues to hum along. The real drag came from optimisation and infrastructure, including the pause at Rough storage.  Importantly, Centrica is still investing through the cycle, £1.2bn in capital expenditure, including stakes in Sizewell C and Grain LNG, long-duration assets tied to Britain’s energy resilience.

“Centrica shares have had a strong run over the past year, buoyed by cash returns and a repaired balance sheet. This update may test that momentum. But for investors, the story is shifting from windfall to durability, which is a different, steadier kind of power.”

BAE Systems powers higher as defence spending soars

Mark Crouch, market analyst for eToro, says: “BAE Systems doesn’t manufacture optimism, it manufactures deterrence. And right now, deterrence is in high demand. A 12% rise in operating profit tells you governments aren’t hesitating in reaching for their chequebooks. BAE’s order book now stands at a record £83.6bn, stretching years into the horizon, and it’s why BAE shares have definitively outpaced the FTSE 100. With free cash flow set to top £6bn through 2026, that trajectory looks set to continue.

“For BAE investors, the drivers are clear. NATO nations are fully committed to rearming, a UK–Türkiye Typhoon deal adds further fuel to earnings, while a US Space Force missile-tracking contract pulls BAE further into the high-tech frontier.

“There’s a bittersweet truth to investing here. Tensions in the Middle East are close to boiling over, while the Russia-Ukraine War grinds on. With military spending now firmly at the forefront of global government policy, it’s an uncomfortable backdrop. That said, while BAE offers nations protection in unsettled times, it also offers investors a form of armour too.

Glencore shares pop despite weaker earnings

Adam Vettese, market analyst for eToro, says: “Glencore has delivered one of those classic mixed mining updates, indicating the company is better under the bonnet than the headline numbers suggest. Core earnings dipped 6% to $13.5bn as weaker coal prices offset record copper, but the second half showed a clear improvement and the trading arm once again provided a solid cushion.

“Management is trying to keep both income and growth investors onside with $2 billion of shareholder returns, while continuing to talk up a copper led growth story that taps directly into the energy transition theme. Although, Glencore also still leans heavily on coal cash flows at a time when ESG pressure is only going one way.

“The failure to agree terms with Rio Tinto only underlines that Glencore clearly believes its trading franchise and copper pipeline deserve a much richer valuation than the market, or Rio, is currently prepared to pay. Shares have reacted positively this morning following a strong start to the year. For now, this remains a value tilted way to play tighter copper markets, with income and buybacks paying investors to wait for the cycle to turn more decisively in their favour.”