Slide 1: ASX cover letter
Rio Tinto Limited 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 ASX Market Announcements Australian Securities Exchange SYDNEY NSW 2000 13 February 2014 Dear Sir, Attached is the Rio Tinto annual results
Slide 2: 2013 full year results
13 February 2014 Safety Performance Strategy Delivery 2013 full year results Delivering greater value for shareholders
Slide 3: Cautionary statement
2 Cautionary statement This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consists of the following slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions. Forward-looking st
Slide 4: Sam Walsh
13 February 2014 Safety Performance Strategy Delivery Sam Walsh Chief executive
Slide 5: Safety culture critical to operating effectively
4 Safety culture critical to operating effectively All injury frequency rates 2003 –2013 Per 200,000 hours worked 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 Hazards assessment at Hope Downs 4, Pilbara ©2014, Rio Tinto, All Rights Reserved
Slide 6: Transforming our business performance
5 Delivering greater value for shareholders Transforming our business performance Cost reduction Record production Capex reduced targets exceeded 9% production 26% Operating cash costs 1 growth in 2013 $2.3bn Iron Ore Exploration less than in 2012 and evaluation Thermal Coal $1bn Bauxite 1 Copper
Slide 7: Delivering greater value for shareholders
6 Delivering greater value for shareholders Underlying earnings of $10.2 billion (+10%) Cash flows from operations of $20.1 billion (+22%) Net debt reduced to $18.1 billion Net earnings of $3.7 billion 15% increase to the full-year dividend ©2014, Rio Tinto, All Rights Reserved
Slide 8: Chris Lynch
13 February 2014 Safety Performance Strategy Delivery Chris Lynch Chief financial officer
Slide 9: 10% growth in underlying earnings from lower costs and higher volumes
8 10% growth in underlying earnings from lower costs and higher volumes Underlying earnings 2012 vs 2013 US$ million (post tax) 12,000 557 1,559 10,217 10,000 9,269 (567) (13) 1,008 538 (477) 8,000 (368) (1,289) 6,000 4,000 2,000 0 2012 Exploration Price Exchange Energy & Volumes Cash cost Explorati
Slide 10: Net earnings reflect impairments and non-cash exchange losses
9 Net earnings reflect impairments and non-cash exchange losses US$m 2013 underlying earnings 10,217 Impairments (3,428) Exchange losses on (2,731) debt and derivatives Other, net (393) Net earnings 3,665 ©2014, Rio Tinto, All Rights Reserved
Slide 11: Exceeded 2013 cost reduction targets
10 Exceeded 2013 cost reduction targets Cost reductions 2013 vs. 2012 • $2.3 billion of operating cash cost US$ million improvement versus 2012 Post tax earnings − Exceeded $2 billion target for 2013 variance Pre tax − Further savings in 2014 to reach Operating cash costs 1,559 2,279 $3 billion full
Slide 12: Good progress on our operating cost targets
11 Good progress on our operating cost targets Pre tax operating cash cost variance • Thousands of initiatives being Reduction versus 2012 (US$ million) implemented across the business 3,000 • 4,000 net headcount reduction • Significant productivity gains +14% 2,279 achieved 2,000 • Group unit cash
Slide 13: Focused reductions in exploration and evaluation spend
12 Focused reductions in exploration and evaluation spend Exploration and evaluation costs • Strong project pipeline US$ million (pre tax) − Copper: La Granja and Resolution 2,250 − Further 28 projects ongoing across 2,000 10 commodities 1,750 • Exceeded $750 million target for 1,500 $1,023 million
Slide 14: Strong cash flow from operations
13 Strong cash flow from operations Cash flow from operations • 22% increase in cash flows from US$ billion operations versus 2012 12.1 − Cash cost reductions − 9% volume growth • $5.6 billion increase in post tax cash 8.6 8.0 flow from operating activities vs. 7.9 2012 to $15.1 billion • $3.5 billi
Slide 15: Capital expenditure reduced by 26%
14 Capital expenditure reduced by 26% Expected capital expenditure profile* • Five major projects completed US$ billion in 2013 20 • 2013 capex down by 26% 17.6 26% compared to 2012 15 • Iron ore growth pathway optimised 12.9 >15% at a lower capital intensity <11 10 >20% • $1.9 billion reduction in
Slide 16: Net debt has peaked and is declining
15 Net debt has peaked and is declining Net debt profile • Net debt reduced by: US$ billion − $4.0 billion versus 30 June 2013 22.1 − $1.1 billion versus 31 Dec 2012 19.2 18.1 • Long term and smooth debt maturity profile − Weighted average maturity of around eight years − Weighted average cost of de
Slide 17: Capital allocation priorities
16 Capital allocation priorities 1 Essential sustaining 2 Progressive dividends 3 Iterative cycle of: capex Further cash Compelling returns to growth shareholders Debt reduction ©2014, Rio Tinto, All Rights Reserved
Slide 18: Greater returns for shareholders
17 Greater returns for shareholders Free cash flows are improving • Reducing costs • Increasing volumes • Cash proceeds from divestments Lowering Strengthening the Increasing the capex balance sheet progressive dividend Reduced by 26% Net debt peaked and was 2011: +34% this year and expect down to $
Slide 19: Sam Walsh
13 February 2014 Safety Performance Strategy Delivery Sam Walsh Chief executive
Slide 20: Our businesses are well placed to meet global demand growth
19 Our businesses are well placed to meet global demand growth OECD recovery underway World GDP composition Regional contribution to global PPP GDP growth Percentage of world GDP, 2010 PPP$ 5% 60% 50% 4% 40% 3% 30% 2% 20% 1% 10% 0% 0% 2011A 2012A 2013A 2014F 2015F 2000 2005 2010 2015 2020 2025 China
Slide 21: A consistent strategy with clear priorities
20 A consistent strategy with clear priorities Invest in and operate long-life, Strategy low-cost, expandable operations Improve Strengthen the Deliver Priorities performance balance sheet results Outcome Greater value for shareholders ©2014, Rio Tinto, All Rights Reserved
Slide 22: Pilbara video
21 Pilbara video ©2014, Rio Tinto, All Rights Reserved
Slide 23: Delivering breakthrough iron ore growth
22 Delivering breakthrough iron ore growth Mine capacity potential • Record Pilbara mine production of Million tonnes per annum 250 Mt in 2013 (YoY +5%) 400 • 290 Mt/a commissioning continues to 375 ramp-up ahead of schedule 350 • 360 Mt/a capital intensity reduced from mid $150s/t to $120-130/t* 32
Slide 24: Copper delivers strong volume recovery
23 Copper delivers strong volume recovery • Mined copper volumes up 15% in 2013 with increased contributions from all four key operating assets • Significant progress in executing the 4+2 strategy − Disposals of $1.8 billion of non- core assets − $514 million productivity improvement and cost saving
Slide 25: Our other product groups are focused on reducing costs and improving productivity
24 Our other product groups are focused on reducing costs and improving productivity Aluminium Diamonds & Minerals Energy • $574 million in cost • Creating demand-led, • Fostering a culture of reductions during 2013 integrated operations that performance and cost are responsive to the control • Stre
Slide 26: Delivering greater value for shareholders
25 Delivering greater value for shareholders • Underlying earnings of $10.2 billion (+10%) • Cash flows from operations of $20.1 billion (+22%) • Net debt reduced to $18.1 billion • Dividend increased by 15% ©2014, Rio Tinto, All Rights Reserved
Slide 27: 2013 full year results
13 February 2014 Safety Performance Strategy Delivery 2013 full year results Delivering greater value for shareholders
Slide 28: Unrelenting focus to deliver on our priorities
27 Unrelenting focus to deliver on our priorities Priority Delivered in 2013 Focus areas for 2014 • $2.3 billion cash operating cost reductions • Target further cost reductions to reach $3 • $1 billion lower exploration & billion full-year improvement on 2012 evaluation spend Improve • Copper equiva
Slide 29: Improved second half underlying earnings through volume increases and cost reductions
28 Improved second half underlying earnings through volume increases and cost reductions Underlying earnings H1 2013 vs H2 2013 US$ million (post tax) 7,000 65 67 5,988 6,000 529 85 1,243 5,000 4,229 30 407 4,000 (22) (645) 3,000 2,000 1,000 0 H1 2013 Absence of Price Exchange Energy & Volumes Cash
Slide 30: Underlying earnings impacted by lower commodity prices
29 Underlying earnings impacted by lower commodity prices Underlying earnings 2012 vs 2013 US$ million (post tax) 10,000 9,269 9,000 Thermal (477) Iron ore Met. coal Copper Aluminium coal Ind. mins Gold Other 8,000 (1,289) 125 7,000 6,000 5,000 (71) (61) 4,000 (186) (182) 3,000 (243) 2,000 (327) (34
Slide 31: Partly offset by favourable exchange rates and higher volumes
30 …partly offset by favourable exchange rates and higher volumes Underlying earnings 2012 vs 2013 US$ million (post tax) 10,000 Iron ore Aluminium1 Copper Other Coal Gold Ind. 9,269 mins 9,000 538 485 1,008 (477) 8,000 (368) 7,000 (1,289) 200 6,000 5,000 65 44 4,000 (49) 3,000 (91) (116) 2,000 1 Ex
Slide 32: Modelling earnings
31 Modelling earnings Impact on 2013 2012 average 2013 average full year published published 10% change in underlying Earnings sensitivity price/rate price/rate 2013 average earnings ($m) Copper 361c/lb 333c/lb +/-33c/lb 221 Aluminium $2,018/t $1,845/t +/-$185/t 553 Gold $1,669/oz $1,410/oz +/-$141/
Slide 33: Iron ore: record Pilbara volumes following early delivery of expansions
32 Iron ore: record Pilbara volumes following early delivery of expansions Underlying earnings 2012 vs 2013 US$ million (post tax) 11,000 24 485 240 10,000 416 9,858 9,247 125 (591) (88) 9,000 8,000 7,000 6,000 5,000 2012 Price Exchange rates Energy & Volumes Other cash Exploration & Tax & other 201
Slide 34: Copper: Cost savings were offset by lower prices
33 Copper: Cost savings were offset by lower prices Underlying earnings 2012 vs 2013 US$ million (post tax) 1,200 1,059 156 1,000 821 352 800 (131) (148) 600 50 400 (15) (30) (472) 200 0 2012 Exploration Price Exchange Energy & Volumes Other cash Exploration & Tax & other 2013 properties rates infla
Slide 35: Aluminium: volume and cost improvements offset pricing pressure
34 Aluminium:(1) volume and cost improvements offset pricing pressure Underlying earnings 2012 vs 2013 US$ million (post tax) 600 68 557 392 23 500 400 300 200 54 200 100 201 - (100) (200) (125) (300) (256) 2012 Price Exchange Energy & Volumes Other cash Exploration & Tax & other 2013 rates inflatio
Slide 36: Energy: Cost saving initiatives offset by price declines
35 Energy: Cost saving initiatives offset by price declines and absence of divestment gains Underlying earnings 2012 vs 2013 US$ million (post tax) 400 309 300 200 100 61 6 33 442 - (258) (100) (200) 188 (300) (400) (52) (500) (107) (556) (600) 2012 Exploration Price Exchange Energy & Volumes Other
Slide 37: Diamonds & Minerals: impacted by soft markets and reduced E&E spend
36 Diamonds & Minerals: impacted by soft markets for industrial minerals and reduced E&E spend Underlying earnings 2012 vs 2013 US$ million (post tax) 400 56 350 350 300 272 250 200 149 150 114 100 50 (69) 0 (130) (36) (6) 2012 Price Exchange rates Energy & Volumes Other cash Exploration & Tax & oth
Slide 38: Other movements in underlying earnings
37 Other movements in underlying earnings Underlying earnings impact Epl'n eval'n Interest, FX/ Energy & Cash Epl'n 2013 Non tax & US$ million 2012 price Inflation Volumes Costs eval'n disp Cash other 2013 Intersegment (8) – – – 4 – – – – (4) Other operations (582) 28 (3) 26 34 – – 47 169 (281) Cent
Slide 39: Provisional pricing
38 Provisional pricing Open shipments Provisional pricing effect (million lbs) (US$m) 31 Dec 2013 31 Dec 2012 2013 2012 Escondida 240 215 (37) 21 Northparkes – 33 (5) 1 Oyu Tolgoi 14 – 1 – Grasberg JV/Other – 1 – – 254 249 (41) 22 ©2014, Rio Tinto, All Rights Reserved
Slide 40: Earnings reconciliations
39 Earnings reconciliations 2013 Energy Resources of Australia US$m Earnings per ERA press release (A$136m) (132) Increased depreciation of closure asset (3) Tax and unwinding of discount 2 Less: Minority interests (31.6%) 42 Other (4) Underlying earnings as reported by Rio Tinto (95) ©2014, Rio Tin