Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Presentation (June 2009)
33 slides from Rio Tinto's investor presentation, Jun 5, 2009
Slide 1: ASX cover letter to Company Announcements Office
120 Collins Street Melbourne 3000 Australia Postal Address: GPO Box 384D Melbourne 3001 Australia T +61 (0) 3 9283 3333 F +61 (0) 3 9283 3707 For personal use only Company Announcements Office Australian Stock Exchange Limited SYDNEY NSW 2000 5 June 2009 Dear Sir/Madam, Attached is a presentation gi
Slide 2: Investor presentation, 5th June 2009
For personal use only Investor presentation 5th June 2009
Slide 3: Cautionary Statement
For personal use only Cautionary Statement Certain statements made in this presentation constitute forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “may”, “will”, “expect
Slide 4: Jan du Plessis, Chairman
For personal use only Jan du Plessis Chairman
Slide 5: Introduction
Introduction For personal use only • Potential value creating joint venture with BHP Billiton • Rights issue to strengthen balance sheet • Decision not to proceed with previously announced Chinalco transaction Decisions reflect three parallel developments: • Improved market conditions since February
Slide 6: Key benefits
Key benefits For personal use only Expected BHP Billiton joint venture benefits • Potentially significant total cost synergies of over $10 billion NPV • Efficient future development of Pilbara iron ore assets • Equalisation payment to Rio Tinto for equity type interests; transaction is subject to co
Slide 7: Terms of equity issuance
Terms of equity issuance For personal use only • Raising US$15.2(1) billion through fully* underwritten 21 for 40 rights issues(2) • Equivalent issue price in both markets – RTP— 1,400 pence per share (equivalent to US$22.94 per share(1)) – RTL—A$28.29 per share (equivalent to US$22.94 per share(1))
Slide 8: Dividends
Dividends For personal use only • No interim dividend in 2009 • Expect to make 2009 final dividend payment subject to satisfactory trading results • Group remains committed to long term progressive dividend policy with regard to total amount paid • Expectation is that the total cash dividend payment
Slide 9: Tom Albanese, Chief Executive Officer
For personal use only Tom Albanese Chief Executive Officer
Slide 10: New value creating iron ore joint venture with BHP Billiton
New value creating iron ore joint venture For personal use only with BHP Billiton announced today • In principle agreement for 50:50 joint venture of Pilbara iron ore assets • Clear industrial logic in combination • Potential total synergies with NPV in excess of $10 billion • Equalisation payment o
Slide 11: Chinalco transaction no longer being pursued
Chinalco transaction no longer being pursued For personal use only • Original deal provided comprehensive solution at the time • Changing circumstances led to need for revision • Despite best efforts to agree new terms with Chinalco, this could not be achieved • Break fee of $195 million payable • S
Slide 12: Unprecedented pace and severity of economic deterioration
Unprecedented pace and severity of economic For personal use only deterioration at end of 2008 GDP growth has fallen sharply; downward revisions to global growth forecasts over the last year World GDP growth and copper demand Consensus forecasts for 2009 GDP Growth Percent yoy Percent yoy 6 12 12 10
Slide 13: Results impacted by the global economic downturn
Results impacted by the global economic For personal use only downturn and difficult trading conditions Lower underlying performance in Q1 2009 (1) • Underlying earnings of $1.8 billion(2), down 7% compared to Q1 2008 • Cash flow from operations of $3.4 billion(3), down 3% compared to Q1 2008 Measur
Slide 14: Q1 Product Group underlying earnings
Q1 Product Group underlying earnings For personal use only $m Q1 2008 Q1 2009* % change Iron ore 916 988 +8% Aluminium 330 (481) -246% Copper & Diamonds 861 182 -79% Energy & Minerals 241 1,258 +422% • Some recovery in iron ore production of Pilbara mines • Benchmark iron ore pricing negotiations se
Slide 15: Group well positioned for the future
Group well positioned for the future For personal use only • Strong customer base in key growth markets • Lower cost structure • Product diversification • Economic downturn may be stabilising and there are signs of recovery during Q109 in China, with positive impact from stimulus package expected •
Slide 16: Guy Elliott, Chief Financial Officer
For personal use only Guy Elliott Chief Financial Officer
Slide 17: Rights issues overview
Rights issues overview • Raising US$15.2(1) billion through fully* underwritten 21 for 40 rights issues(2) For personal use only • Equivalent issue price in both markets – RTP— 1,400 pence per share (equivalent to US$22.94 per share(3)) – RTL—A$28.29 per share (equivalent to US$22.94 per share(3)) •
Slide 18: Expected timetable
Expected timetable plc Limited For personal use only Announcement 0.00am (London time) 9:00am (Sydney time) 5 June 2009 5 June 2009 Publication of prospectus (plc) / lodgement of offer booklet 16 June 2009 16 June 2009 on ASX (Limited) Record date for entitlements under the rights issue 15 June 2009
Slide 19: Divestment and refinancing update
Divestment and refinancing update For personal use only Divestments • $2.5 billion announced in Q1 2009 – $975 million closed in Q1 2009 – Corumbá - closing expected in H2 2009 – Jacobs Ranch – US FTC requested additional information • Borates withdrawn from sale • Other sale processes continuing •
Slide 20: Financial position at March 2009
Financial position at 31 March 2009* For personal use only Facility ($bn) Maturity Drawn Undrawn • Net debt reduced by $0.8 billion during Acquisition facility A 2009 8.9 - first three months of 2009 Other short term debt 2009+ 2.0 - • Average interest rate of Alcan facilities Acquisition facility B
Slide 21: Recapitalisation will substantially improve balance sheet
Recapitalisation will substantially improve Rio For personal use only Tinto’s balance sheet Proforma net debt ($bn) • Rights issue and application to debt 40 38 (15) of April bond proceeds enable 35 payment of 95% debt maturities in 2009 and 2010 30 • Pro forma gearing ratio declined from 25 23 61 p
Slide 22: Capital expenditure
Capital expenditure For personal use only Actual and forecast capital expenditures ($bn) 10 • Sustaining capital expenditures estimated to be about $2 billion per 8 annum • Q1 capital expenditures higher than 6 previously guided due to timing and continuation of certain projects 4 • 2009 capital exp
Slide 23: Jan du Plessis, Chairman
For personal use only Jan du Plessis Chairman
Slide 24: Summary
Summary For personal use only • Exciting potential new joint venture with BHP Billiton announced today • Potential for more efficient future development of Pilbara iron ore assets • Expected to create significant value for shareholders • Group committed to developing Chinalco relationship • Recapita
Slide 25: Appendix
For personal use only Appendix
Slide 26: Q1 2009 underlying earnings impacted by declining prices
Q1 2009 underlying earnings impacted by For personal use only declining prices offset by forex* 2,000 Includes $797m gain from 1,800 sale of potash assets 1,600 1,400 1,200 $m 1,000 800 600 400 200 0 1,881 (1,184) 470 (402) (102) 70 898 120 1,751 Q1 2008 Prices Exchange Vol Inflation Energy Explor'n
Slide 27: Risk Factors
Risk Factors There are various risks attached to investing in the Rio Tinto Group. A summary of material risks is set For personal use only out below. These risks are not the only ones facing the Group. Additional risks and uncertainties that are not yet known and some that are not currently deemed
Slide 28: Risk factors (cont.)
Risk factors (cont.) Risks relating to Rio Tinto (cont.) For personal use only • The Group’s borrowing costs and its access to the debt capital markets depend both on its long term credit ratings, (which were recently downgraded), and on interest rate levels • Failure of the Group to make successful
Slide 29: Risk factors (cont.)
Risk factors (cont.) Risks relating to Rio Tinto (cont.) For personal use only • The Group’s land and resource tenure could be disputed resulting in disruption and/or impediment in the operation or development of a resource • The Group’s operations are resource intensive and changes in the cost and/
Slide 30: Risk factors (cont.)
Risk factors (cont.) Risks relating to Rio Tinto (cont.) For personal use only • The Group’s costs of close down and restoration, and for environmental clean up, could be higher than expected due to unforeseen changes in legislation, standards and techniques. Underestimated or unidentified costs cou
Slide 31: Risk factors (cont.)
Risk factors (cont.) Risks relating to the Rights Issues and the New Shares (cont.) For personal use only • An active trading market in the Rio Tinto Rights may not develop • Rio Tinto’s ability to continue to pay dividends will depend on the level of profits and cashflows generated by the Group • S
Slide 32: International Selling Restrictions
For personal use only International Selling Restrictions This presentation is an advertisement and not a prospectus, disclosure document or offering document under Australian law, the laws of England and Wales or any other law and does not purport to be complete. Investors should not subscribe for o
Slide 33: International Selling Restrictions
For personal use only International Selling Restrictions To the extent permitted by law, no reliance may be placed for any purpose on the accuracy or completeness of the information or opinions contained herein or communicated in relation hereto and no representation or warranty, express or implied,