Anglo American Plc · LSE:AAL
Anglo American — H1 2012 Earnings Presentation
36 slides from Anglo American's earnings presentation, Jul 27, 2012
Slide 1: Interim Results, Six Months Ended 30 June 2012
INTERIM RESULTS SU S SIX MONTHS ENDED 30 JUNE 2012 27 J July l 2012 De Jwaneng Jwaneng Beers Botswana Botswana
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the written materials/slides for a presentation concerning Anglo American. By attending this presentation and/or reviewing the slides you agree to be bound by the following con
Slide 3: I. Operational Performance
I. OPERATIONAL PERFORMANCE CYNTHIA CARROLL Kolomela opening
Slide 4: Highlights
HIGHLIGHTS • Group operating profit of $3.7bn, down 38%, due Operating profit ($bn) to weaker prices 6.0 5.4 • Underlying U d l i earnings i off $1 $1.7bn 7b and d underlying d l i 51 5.1 EPS $1.38 4.4 3.7 • Operational and strategic delivery: 2.8 2.1 – Volume growth through successful project execu
Slide 5: Safety Performance
SAFETY PERFORMANCE • 94% of our operations are fatality-free, 52% are Fatalities LTI-free 40 • 7 employees lost their lives in work related H2 12 H1 incidents, 5 at Platinum and 2 at Thermal Coal 28 • Outstanding safety performance: 20 16 17 – Kolomela achieved 26.4 million man-hours 7 15 without a
Slide 6: Iron Ore and Manganese
IRON ORE AND MANGANESE • Operating profit of $1,779m, down 28% Record export iron ore sales • Kumba’s revenue down 9% due to 21% decrease in export prices partially offset by record export Mt 20.7 sales of 21 Mt 18.4 18.7 • Kolomela ramp up more than offset lower production from Sishen – Kolomela re
Slide 7: Minas-Rio Update
MINAS-RIO UPDATE Project progress and challenges Permits access Land Drivers Mitigation plan H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 Benefication Plant - 51% completed Mine • Increased resources on the Legal, Licensing Land Waste Stockpile Blast restrictions, cave Management and Government Relations fun
Slide 8: Metallurgical Coal
METALLURGICAL COAL • Operating profit of $159m, a 68% decrease due to Record export metallurgical production lower prices partly offset by higher volumes Mt +40% • Record metallurgical production, production a 40% increase increase, 8.6 8.1 benefiting from productivity improvements and rain mitigati
Slide 9: Thermal Coal
THERMAL COAL • Operating profit $433m, down 17% due to lower Record production at Cerrejón prices partially offset by higher volumes Mt +18% • South Africa export thermal coal sales up 22% 6.1 • SA export production flat despite safety 5.6 stoppages, industrial action and planned closure 5.1 of high
Slide 10: Copper
COPPER • Operating profit of $978m, down 30% due to lower Production profile prices and higher costs kt % 11 1.1 • Production P d ti increased i d by b 14%, 14% d driven i b by 350 Los Bronces expansion (93 kt); 92% of design 300 19 1.0 93 capacity 250 0.9 0.8 • Los Bronces established operation was
Slide 11: Nickel
NICKEL • Operating profit of $58m(1), 38% decrease due to Production profile lower prices kt +80% • Production P d ti increased i d by b 80% d driven i b by th the 22.9 ramp up of Barro Alto 4.6 Codemin • Barro Alto targeting full capacity rates in 16.4 Loma 12.7 6.3 early 2013 4.9 de Níquel 4.6 • C
Slide 12: Diamonds
DIAMONDS • Share of operating profit $250m, down 44% Production trend reflects focus on maintenance and waste stripping • Diamond Trading Company (DTC) pricing levels M carats remained i d fl flatt in i H1 2012 9.3 8.1 • De Beers Group sales of $3.3bn 7.4 7.2 6.5 6.2 • Production decreased 13%; larg
Slide 13: Platinum
PLATINUM • Operating profit of $84m, down 85% due to Growth from low cost Mogalakwena weaker prices and higher costs Equivalent refined Recoveries koz • Productivity increased by 11% to 200 % 80 6.54 m2 per employee 75 • Strong performance in low cost Mogalakwena 160 70 mines with output up 9% and c
Slide 14: II. Financials
II II. FINANCIALS RENE MEDORI
Slide 15: Financial Overview
FINANCIAL OVERVIEW Underlying EPS ($/share) Key financial metrics 2.14 4.13 5.06 1.38 $bn H1 2012 H1 2011 Change EBITDA 4.9 7.1 (31)% Operating profit 3.7 6.0 (38)% Underlying earnings 1.7 3.1 (46)% 2.58 2.48 2.29 Capex(1) 2.3 2.3 0% 1.84 1 23 1.23 1.38 Net debt 3.1 1.4(2) 0.91 H1 H2 H1 H2 H1 H2 H1
Slide 16: H1 2012 Operating Profit Waterfall
H1 2012 OPERATING PROFIT WATERFALL ($bn) 65 6.5 07 0.7 (0.4) 6.0 0.2 5.5 (1.1) Bulks LBDP & Other H1 2012 Kolomela (4) 5.0 4.5 (0.7) (0.3) 0.2 (0.3) 0.5 (0.1) 4.0 Traded (0.4) 6.0 (0.1) 3.5 3.0 4.4 37 3.7 2.5 2.0 1.5 H1 2011 Price(1) Exchange Inflation(2) Volume (3) Cash costs Non cash Associates Ot
Slide 17: Operating Profit Variances: Price (base and precious)
OPERATING PROFIT VARIANCES Price (base and precious) H1 2012 vs. H1 2011 ($m) Platinum price $/oz Platinum Rand/oz 2 000 2,000 R d Pt Rand Pt. b basket k t 25 000 25,000 1,800 20,000 1,600 PGMs (306) 15,000 1,400 10,000 1,200 H1 2011 market price: H2 2011 market price: H1 2012 market price: $1,792/o
Slide 18: Operating Profit Variances: Price (bulks)
OPERATING PROFIT VARIANCES Price (bulks) H1 2012 vs. H1 2011 ($m) Iron ore(1) (Mt) Metallurgical coal(2) (Mt) Thermal coal RSA (Mt) Export realised $169/t $134/t $251/t $191/t $120/t $99/t price Other(4) 20.7 7.6 8.2 35 Export 18.4 6.8 sales 28% 5.5 2% Thermal coal (148) 29% 3% volume 17% 53% 100% 1
Slide 19: Operating Profit Variances: Sales Volume
OPERATING PROFIT VARIANCES Sales volume H1 2012 vs. H1 2011 ($m) Sales performance (% change vs. H1 2011) 249 53% Metallurgical 105 38% Coal KIO 72 18% 13% 14% Copper pp 69 Thermal 57 Coal Other 32 (21%) Platinum (86) Platinum KIO (1) Copper Nickel(2) Metallurgical Thermal Coal(4) Coal(3) (1) Sishen
Slide 20: Above CPI Cash Cost Movements
ABOVE CPI CASH COST MOVEMENTS Non-controllable costs (e.g. fuel, power) 11% Controllable costs 4% 8% 3% 5% 1% 4% 7% 1% 2% 5% 4% 2% 3% (2%) (3%) (5%) 2007 (1) 2008(1) 2009 (1) 2010 2011 H1 2012 (1) 2007 to 2009 excludes AngloGold Ashanti, Mondi, Highveld Steel and Tongaat-Hulett / Hulamin; 2010 onwar
Slide 21: Group Capex and Net Debt Overview
GROUP CAPEX AND NET DEBT OVERVIEW Capital expenditure ($bn) Net debt ($bn) Other Projects Minas-Rio Opening O i nett debt d bt – 1 JJan 2012 1.4 1 4 Los Bronces Operating cash flows (3.2) Barro Alto Capital expenditure 2.3 Kolomela Cash tax paid 0.9 2.3 2.3 SIB Net interest p paid 0.2 0.4 0.4 Divide
Slide 22: III. Disciplined Capital Allocation
III III. DISCIPLINED CAPITAL ALLOCATION CYNTHIA CARROLL
Slide 23: Near Term Weakness with Robust Long Term Fundamentals
NEAR TERM WEAKNESS WITH ROBUST LONG TERM FUNDAMENTALS World growth forecasts continue to be revised Long term outlook robust downwards Constant PPP terms, % year Residential and commercial floor 80,000 space required – equivalent to the 6 Km2 entire land area of Austria by 2025 5 7.2% Demand growth
Slide 24: A Challenging and Evolving Supply Landscape
A CHALLENGING AND EVOLVING SUPPLY LANDSCAPE Key risks Taxes/ royalties A il bilit off h Availability human resources Mongolia Canada Access to infrastructure Community opposition Licensing / permitting Access to water Guinea Electricity supply USA Philippines pp es DRC Peru Brazil Indonesia Australi
Slide 25: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Dividend rebased • Resilient and well diversified portfolio is the Cents per share outcome of adhering to a clear and +14% consistent i t t strategy t t 32 • High quality and low cost projects are ramping 25 28 up strongly • Progress to date sees us well positioned to
Slide 26: Optionality from a Diversified and Balanced Portfolio
OPTIONALITY FROM A DIVERSIFIED AND BALANCED PORTFOLIO Unique portfolio composition Metallurgical coal production 2011 EBITDA % 14.2 Mt Peer 1 2011 2012 F t Future potential t ti l Iron ore production(5) Peer 2 41.3 Mt Peer 3 2011 2012 Future potential Copper pp production p Peer 4 599 kt Investment
Slide 27: Continued Discipline in a Challenging Environment
CONTINUED DISCIPLINE IN A CHALLENGING ENVIRONMENT • Clear and consistent strategy High quality and low cost projects are ramping up strongly • Divestment program largely completed despite Kolomela Los Bronces Operating profit challenging h ll i macroeconomic i environment i t capacity capacity contr
Slide 28: Appendix
APPENDIX
Slide 29: Analysis of Operating Profit
ANALYSIS OF OPERATING PROFIT $ $m H1 2012 H1 2011 Iron Ore and Manganese 1,779 T 2,462 Metallurgical Coal 159 T 501 Thermal Coal 433 T 521 Copper 978 T 1,401 Nickel 58 T 93 Platinum 84 T 542 Diamonds 250 T 450 Other Mining and Industrial 180 S 136 Exploration (72) T (46) Corporate activities and una
Slide 30: Analysis of Underlying Earnings
ANALYSIS OF UNDERLYING EARNINGS $ $m H1 2012 H1 2011 Iron Ore and Manganese 551 T 867 Metallurgical Coal 110 T 358 Thermal Coal 285 T 385 Copper 510 T 842 Nickel 32 T 58 Platinum 21 T 285 Diamonds 176 T 299 Other Mining and Industrial 102 S 90 Exploration (69) T (45) Corporate activities and unalloc
Slide 31: Average Market Prices
AVERAGE MARKET PRICES H1 2012 H1 2011 Iron ore (FOB Australia) - $/t 135 T 171 Thermal coal (FOB South Africa) - $/t 99 T 121 Thermal coal (FOB Australia) - $/t $ 104 T 124 HCC (FOB Australia average quarterly benchmark) - $/t 223 T 278 Copper (LME) - cents/lb 367 T 426 Nickel - cents/lb 836 T 1,159
Slide 32: Underlying Earnings Sensitivities
UNDERLYING EARNINGS SENSITIVITIES(1) C Commodity dit / currency Ch Change in i price i / exchange h $ $m Iron ore + $10/t 72 Metallurgical coal + $10/t 46 Th Thermal l coall + $10/t $ 110 Copper + 10c/lb 38 Nickel + 10c/lb 3 Platinum + $100/oz 42 Rhodium + $100/oz 7 Palladium + $10/oz 3 ZAR / USD +
Slide 33: Regional Analysis – Operating Profit
REGIONAL ANALYSIS – OPERATING PROFIT $ $m H1 2012 H1 2011 South Africa 2,138 T 3,322 Other Africa 207 T 371 S hA South America i 1 406 1,406 T 1 777 1,777 North America (54) T 72 Australia and Asia 204 T 603 Europe (177) T (121) Total operating profit 3,724 6,024 33
Slide 34: Capital Expenditure
CAPITAL EXPENDITURE(1) $ $m H1 2012 H1 2011 Iron Ore and Manganese 784 563 Metallurgical Coal 370 222 Th Thermal lCCoall 101 31 Copper 488 831 Nickel 89 177 Platinum 356 410 Other Mining and Industrial 109 88 Exploration 1 - Corporate activities and unallocated costs 10 6 Total capital expenditure 2
Slide 35: Operating Profit Variances: Exchange
OPERATING PROFIT VARIANCES Exchange H1 2012 vs. H1 2011 ($m) ZAR/US$ exchange rate 9.0 527 Other (1) 8.0 9 AUD 22 BRL 50 7.0 6.0 H1 2011: 6.90 H2 2011: 7.63 H1 2012: 7.94 5.0 Jan 2011 Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 BRL/US$ exchange rate ZAR 446 2.2 2.0 1.8 1.6 1.4 H1 2011: 1 1
Slide 36: Liquidity Headroom and Debt Profile
LIQUIDITY HEADROOM AND DEBT PROFILE Liquidity headroom ($bn) 20.2 19.3 17.6 15 4 15.4 12.8 8.4 8.0 11.1 9.5 9.5 11.7 11.3 6.5 5.9 3.3 (14.6) (13.8) (13.1) (14.4) ((15.9)) 2009 2010 2011 H1 2012 H1 2012 pro forma (1) Liquidity headroom Undrawn facilities Cash Gross debt Debt repayments p y (2) ( ($bn