Anglo American plc · LSE:AAL
Anglo American — H1 2004 Earnings Presentation
54 slides from Anglo American's earnings presentation, Aug 5, 2004
Slide 1: Anglo American: A World of Difference – 2004 Interim Results
ANGLO AMERICAN A WORLD OF DIFFERENCE 5 August 2004 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2
Slide 2: Highlights
Highlights Record H1: - Earnings up 52% at $1,304m - EPS up 49% at 91c per share EBITDA up by $1bn to $3,433m Record performances from Base and Ferrous Metals Cost cutting and efficiencies of $248m (2003:$127m) Interim dividend up 27% at 19c per share 2 2004 Interim Results
Slide 3: Headline earnings by business unit
Headline earnings by business unit H1 2003 H1 2004 5% 5% 13% 16% 11% 24%* 10% 17% 17% 13% 29% 9% 11% 7% 13% 35% Platinum Gold Diamonds Coal Base Metals Industrial Minerals Paper & Packaging Ferrous & Industries *NB:Headline earnings for Paper and Packaging have been adjusted for the 6 months ended 3
Slide 4: Geographic headline earnings mix
Geographic headline earnings mix H1 2003 H1 2004 15% 15% 28% 30% 29% 12% 41% 30% Europe South Africa Americas Rest of World 4 2004 Interim Results
Slide 5: EBITDA – up 40%
EBITDA – up 40% Strong cash generation into 2004 $3,433 $2,377 $2,444 $2,237 H1 2001 H1 2002 H1 2003 H1 2004 5 2004 Interim Results
Slide 6: The economic cycle - where are we?
The economic cycle - where are we? OECD industrial production % 8.0 6.0 4.0 2.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 -2.0 -4.0 -6.0 Source: MSU 6 2004 Interim Results
Slide 7: Falling inventories, rising prices
Falling inventories, rising prices Total LME inventories & MG base metals index LME inventories MG base (kt) metals 3555 MG base metals 260 3055 LME inventories 240 (kt) 2555 220 2055 200 180 1555 160 1055 140 555 120 55 100 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 MG Base Metal Index
Slide 8: H1: Robust commodity prices
H1:Robust commodity prices 260 H1 2004 240 Coal * 220 Copper 200 180 160 Platinum 140 H1 2003 Zinc 120 Gold 100 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Source: MSU * API4 FOB Richards Bay 8 2004 Interim Results
Slide 9: Strategy for growth
Strategy for growth Growth through projects Growth through acquisitions Value from cost cutting and efficiencies 9 2004 Interim Results
Slide 10: Approved $6bn project portfolio
Approved $6bn project portfolio Kleinkopje Isibonelo Buxton $56m $65m Ticor 2 $173m Merebank $150m $54m W.L. Tailings Richards Bay $186m Skorpion $235m Finsch $454m $130m Siguri Cerrejón El Soldado Copebras $52m $17m $80m HBMS 777 $22m Black Mtn $276m $110m Collahuasi Unki $288m $84m Ruzomberok PMR
Slide 11: Longer term unapproved project portfolio
Longer term unapproved project portfolio South America South Africa Rest of the World $2.5bn $2.0bn $2.6bn Quellaveco Hope Downs* Pandora Copper (Peru) Iron ore (Australia) Morro Sem Bone Obuasi Deeps Western Complex Nickel (Brazil) (Ghana) Barro Alto Gamsberg Dawson Valley Nickel (Brazil) Zinc (Aus
Slide 12: Actively managing the asset base
Actively managing the asset base H1 cash acquisitions • Mining acquisitions for cash at current and disposals ($bn) stage in the cycle unlikely 1.3 • But opportunities in IMD/Paper & 0.9 Packaging: – Acquisition of Frantschach minority • Sale of Gold Fields stake ($1.18bn) Acquisitions Disposals 12
Slide 13: Cost savings and efficiency improvements: $248m
Cost savings and efficiency improvements: $248m $188m $116m $60m $52m $40m $1m $22m $3m $4m $10m Procurement Operating efficiencies Maintenance Admin & overhead Labour Materials & supplies 13 2004 Interim Results
Slide 14: Review of Financials
REVIEW OF FINANCIALS Tony Lea 2004 Interim Results
Slide 15: Headline earnings
Headline earnings $m H1 ’04 H1 ’03%ch Profit for the financial period 1,709 760125% Exceptional items (535) 7 Amortisation of goodwill 112 98 Related tax & minority interests 18 (9) Headline earnings for the financial period 1,304 85652% EPS (cents per share) 91 6149% DPS (cents per share) 19 1527%
Slide 16: Headline earnings variances
Headline earnings variances $m 2,000 1,800 866 1,600 75 (216) 1,304 1,400 (105) (40) (28) (20) 1,200 (31) (53) 1,000 856 800 600 400 200 0 H1 2003 Price Exchange Inflation Volume Cash Non-cash Interest DBI Structural H1 2004 cost cost & Other 16 2004 Interim Results
Slide 17: Headline variance: Exchange
Headline variance: Exchange Group total = -$216m Base Corporate & Ferrous & Industrial Paper & Platinum Metals Gold Coal Exploration Industries Minerals Packaging Total - (50) (100) (100) (150) (37) (36) (200) 7 5 (35) (17) (216) (3) (250) $m 17 2004 Interim Results
Slide 18: Headline variance: Price
Headline variance: Price Group total = +$866m $m 1,000 15 82 39 866 900 120 800 (71) 700 172 600 509 500 400 300 200 100 0 Base Metals Platinum Coal Ferrous & Gold Industrial Paper & Total Industries Minerals Packaging 18 2004 Interim Results
Slide 19: Balance sheet
Balance sheet $m 30/06/2004 31/12/2003 Shareholders’ Funds 22,53119,772 Net Debt: South Africa 2,702 3,145 Rest of World 6,028 8,730 5,488 8,633 Minority Interests 4,160 3,396 Total Capital 35,421 31,801 Net Debt/Total Capital 24.6% 27.1% ROCE 13.7% 10.7% EBITDA/Total Capital 20.4% 17.3% 19 2004 Int
Slide 20: Cash flow analysis
Cash flow analysis H1 ‘04 H1 ‘03 EBITDA 3,433 2,444 Share of EBITDA of JVs & associates (938)(800) Increase in working capital (467) (375) Provisions & other non cash 47 17 Operating cash flow 2,075 1,286 Dividends from JVs & associates 147 203 Operating cash flow including dividends from JVs & asso
Slide 21: Review of Operations
REVIEW OF OPERATIONS Tony Trahar 2004 Interim Results
Slide 22: Highlights – Base Metals
Highlights – Base Metals Headline earnings • Higher prices, acquisitions and new up 658% ($m) projects boost performance 455 • Minera Sur Andes contributes $194m • Commissioning of Collahuasi Rosario project ($654m) ahead of schedule and under budget • Skorpion at 85% of design capacity - full produ
Slide 23: Highlights – Paper and Packaging
Highlights – Paper and Packaging Headline earnings • European markets impacted by strong up 10% ($m) Euro and slower growth 226 • Bauernfeind (€344m) and Frantschach 205* minority (€320m) acquired • Structure: creation of single global UCWF and packaging businesses • Ruzomberok and Mondi SA expansio
Slide 24: Highlights – Diamonds
Highlights – Diamonds Headline earnings • Solid performance from De Beers down 13% ($m) • DTC sales of $2.98bn up 2% 248 • Operating cashflow of $870m 217 • Net Debt (including preference shares) reduced by 34% to $1,169bn • Preference share redemption of $175m • US Department of Justice settlement
Slide 25: Highlights – Ferrous Metals and Industries
Highlights – Ferrous Metals and Industries Headline earnings • Improved prices for iron ore, steel, up 405% ($m) manganese, ferrochrome and vanadium 207 • Strong performances from Highveld, Scaw and Samancor; improved results from Boart and Terra • First fully consolidated contribution from Kumba •
Slide 26: Highlights – Coal
Highlights – Coal Headline earnings • South African & South American up 37% ($m) earnings up significantly (+116%) 147 • Australian earnings impacted by – A$ strength 107 – Moranbah – production resumption in H2 • H2 realised prices higher than H1 • Proposed Western Complex joint venture announced i
Slide 27: Highlights – Platinum
Highlights – Platinum Headline earnings • Revenues increased due to higher up 30% ($m) prices and greater sales volumes 139 • Platinum production up 26.6% at 107 1.16m oz (excluding pipeline movements, up 7.8%) • Cost initiatives gain momentum • Target of 2.45m oz in 2004 remains on track H1 '03 H1
Slide 28: Highlights – Industrial Minerals
Highlights – Industrial Minerals Headline earnings • Solid performance despite difficult UK stable ($m) markets 113 114 • Strengthening market conditions in Czech Republic and Poland • Copebrás operating profit doubled due to market strength and contribution from new Goiás plant • New Buxton cement
Slide 29: Highlights – Gold
Highlights – Gold Headline earnings • Lower earnings on the back of strong down 20% ($m) 82 rand and lower production at Morila • Cash costs of $260/oz 66 • AngloGold Ashanti transaction completed in April - integration of assets progressing well • Acquisition of 29.9% stake in Trans- Siberian Gold
Slide 30: Outlook
Outlook Positive global environment for commodities US/Japan GDP growth encouraging China set for soft landing? European growth remains sluggish Anglo’s product and geographic diversity to underpin performance 30 2004 Interim Results
Slide 31: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 5 August 2004 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promot
Slide 32: Additional Information
ADDITIONAL INFORMATION Handout only 2004 Interim Results
Slide 33: Key Dates
Key Dates • Currency Conversion 2 August 2004 • Ex-dividend (JSE) 16 August 2004 • Ex-dividend (LSE) 18 August 2004 • Record date 20 August 2004 • Payment of Interim Dividend 21 September 2004 • Annual Results 23 February 2005 33 2004 Interim Results
Slide 34: Market Prices
Market Prices $m H1 ‘04 H1 ‘03 Gold 401349 Platinum 850654 Palladium 248207 Rhodium 696557 Copper 12575 Nickel 619379 Zinc 4835 Coal: thermal (RSA - API 4 index average) 49.1525.75 34 2004 Interim Results
Slide 35: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$m 10% change in gold price ± 36 10% change in platinum price ± 51 10% change in palladium price ±7 10% change in coal price ± 81 10% change in copper price ± 77 10% change in nickel price ±9 10% change in zinc price ± 20 10% change in pulp price ±4 10% movement in
Slide 36: Projects
Projects Gold Life of mineProduction FullApproved Approved production1 commences prod.capex $m2 Mponeng 4.8m oz 2004 2007 191 TauTona - Expansion project 0.5m oz 2004 2006 52 TauTona - VCR A & Pillar & CLR <120L 2.4m oz 2005 2010 117 Moab Khotsong 4.9m oz 2003 2011 690 Siguri - CIP project 2.1m oz20
Slide 37: Projects
Projects Platinum Total additionalFull Approved Approved production1 prod. capex $m2 ACP Convertor Phase 1 2004 250 Meet PMR Plant Expansion expansion 2005 121 Rustenburg UG2 Phase 1 360,000 oz 2007 210 Bafokeng Rasimone Mine (BRPM) 250,000 oz 2005 317 W. Limb Tailings Retreatment 120,000 oz 2008 18
Slide 38: Projects
Projects Coal Total additionalProduction FullApproved Approved production1 commences prod.capex $m2 Kleinkopje Expansion 1.3m tpa 2004 2004 56 Greenside Expansion 1.0m tpa 2003 2004 17 Cerrejón 2.0m tpa 2005 2007 17 Isibonelo 5.0m tpa 2005 2006 65 German Creek - Capcoal (Grasstree)2 3.9m tpa 2006 20
Slide 39: Projects
Projects Paper and Packaging Total additionalProduction FullApproved Approved production1 commences prod.capex $m1 Ruzomberok: Pulp Mill 105,000 t 2004 2005 129 Ruzomberok: PM18 Expansion 100,000 t 2003 2004 104 Richards Bay: BEKP Line 145,000 t 2004 2005 235 Merebank: PM31 Rebuild 160,000 t 2005 20
Slide 40: Projects
Projects Diamonds Total additionalProduction FullApproved Current projects production1 commences prod.capex $m2 Finsch Block 4 17m carats 2004 2006 130 BB1E Cullinan 5m carats 2004 2007 12 Elizabeth Bay Upgrade 2m carats 2004 2004 27 Total 24m carats 169 Estimated Under review / awaiting approval ca
Slide 41: Projects
Projects Ferrous Metals and Industries Total additional ProductionFull Approved Approved production commences prod.capex $m1 1 Sishen – up current classifier 1 000 ktpa 2004 2004 13 Ticor: Mineral Sands Furnace 1 125 kt slag 2003 2006 137 Ticor: Mineral Sands Furnace 2 125 kt slag 2003 2007 54 Total
Slide 42: Analysis of Headline Earnings
Analysis of Headline Earnings $m H1 ‘04 H1 ‘03 Platinum 139 107 Gold 66 82 Diamonds 217 248 Coal 147 107 Base Metals 455 60 Industrial Minerals 114 113 Paper and Packaging¹ 226 205 Ferrous Metals 207 41 Exploration (42) (39) Corporate Activities¹² (225) (68) Headline Earnings 1,304 856 ¹Headline ear
Slide 43: Analysis of Operating Profit
Analysis of Operating Profit $m H1 ‘04 H1 ‘03 Platinum 320 204 Gold 133 180 Diamonds 350 378 Coal 196 172 Base Metals 565 98 Industrial Minerals 145 136 Paper and Packaging 320 357 Ferrous Metals and Industries 387 104 Exploration (56) (50) Corporate Activities1 (112) (45) Operating Profit2 2,2481,5
Slide 44: Capital Expenditure
Capital Expenditure $m H1 ‘04 H1 ‘03 Platinum 292394 Gold 227117 Coal 64 74 Base Metals 127155 Industrial Minerals 127136 Paper and Packaging 409233 Ferrous Metals and Industries 144 59 Other 7 4 Total 1,397 1,172 44 2004 Interim Results
Slide 45: Headline variance: Volume
Headline variance: Volume Group total = +$75m $m 120 5 14 100 27 (17) 80 75 29 (20) 60 37 40 20 0 Platinum Paper & Base Metals Ferrous Industrial Gold Coal Total Packaging Metals & Minerals Industries 45 2004 Interim Results
Slide 46: Operating Profit Variance
Operating Profit Variance Operating profit after operating exceptional items $m 3,000 1,195 2,500 106 2,248 107 (411) 2,000 (188) (33) (62) 1,534 1,500 1,000 500 H1 2003 Price Exchange Inflation Volume Cash Non-cash Structural H1 2004 Cost Cost & Other 46 2004 Interim Results
Slide 47: Regional Analysis
Regional Analysis Operating profit $m H1 ‘04 H1 ‘03 South Africa 777 548 Rest of Africa 241 299 Europe 416 409 Americas 723 187 Australasia 91 91 2,248 1,534 47 2004 Interim Results
Slide 48: Operating Cost Reconciliation
Operating Cost Reconciliation Subsidiary & JV$mOperating Costs H1 2003 operating costs Subsidiaries (7,979) JVs (share of turnover less operating profit) (386) (8,365) Inflation (247) Exchange (945) Volume (279) Depreciation & amortisation (81) Structural changes (775) Operating impairments 12 Costs
Slide 49: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IAS net profit (published) 217 STC adjustment (9) Movement on unrealised profit on FECs (9) Exploration 11 Profit on assets exchanged not recognised for UK GAAP (10) Net exceptional items 22 Weighted average exchange impact 3 Other 4 229 Minority interest (58) Deprec
Slide 50: AngloGold Ashanti Reconciliation
AngloGold Ashanti Reconciliation $m IAS Headline earnings (published)1 111 Exploration (excluding joint ventures) 19 Amortisation on bond discount 5 Depreciation on assets revalued on acquisition (5) Minority interest (64) UK GAAP contribution to headline earnings 66 1 Before unrealised non-hedge de
Slide 51: De Beers Reconciliation
De Beers Reconciliation Ordinary Preference $m Total shares shares DBI headline earnings – IFRS (100%) 424 - - GAAP adjustments (14) - - DBI headline earnings - UK GAAP (100%) 410 357 53 AA plc’s 45% ordinary share interest 161 161 - Additional 3.65% ordinary share interest 13 13 - AA plc’s portion
Slide 52: EBITDA by Business: H1 '04
EBITDA by Business: H1 ‘04 Operating Profit Exclude Add Back Add BackAdd Back JVs $m (incl JVs Exceptional SubsidiariesSubsidiaries& Associates & Associates) ItemsDepreciationAmortisationDepr. & Amort.EBITDA Platinum 320- 1498 2479 Gold 133- 14318 23317 Diamonds 350- -- 45395 Coal 196- 682 20286 Bas
Slide 53: EBITDA by Business: H1 '03
EBITDA by Business: H1 ‘03 Operating Profit Exclude Add Back Add BackAdd Back JVs $m (incl JVs Exceptional SubsidiariesSubsidiaries& Associates & Associates) ItemsDepreciationAmortisationDepr. & Amort.EBITDA Platinum 20490 81 303 Gold 18012 8716 28323 Diamonds 378- -33 411 Coal 17264 218 256 Base Me
Slide 54: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 5 August 2004 2004 Interim Results