Anglo American plc · LSE:AAL
Anglo American — FY2009 Earnings Presentation
50 slides from Anglo American's earnings presentation, Feb 19, 2010
Slide 1: Preliminary Results Year Ended 31 December 2009
Preliminary Results Year Ended 31 December 2009 Cynthia Carroll, Chief Executive René Médori, Finance Director 19 February 2010 1
Slide 2: A Transforming Group Fit For Purpose
Cynthia Carroll A Transforming Group Fit For Purpose • Major Group reorganisation completed • Strong operational performances across all Business Units • Significant volume growth under way in line with our clear strategy 2
Slide 3: Strong Operational Performance in 2009
Strong Operational Performance in 2009 • Group operating profit of $5.0bn; EBITDA $6.9bn; EPS $2.14 • Higher volumes for Copper, Iron Ore, Platinum and Nickel • Significant restructuring achieved at Anglo Platinum • Asset optimisation and procurement delivering ahead of schedule • Headcount reductio
Slide 4: A Step Change In Safety Performance
A Step Change In Safety Performance Fatalities • 92% of our sites operated without fatalities 44 57% 40 improvement • Anglo Platinum achieved four consecutive fatality-free 28 months for the first time 28 19 • Copper, Met Coal, Nickel and Exploration were fatality- free during 2009 • Anglo Platinum’
Slide 5: A Transforming Group Fit For Purpose
A Transforming Group Fit For Purpose • Major Group reorganisation completed • Strong operational performances across all Business Units • Major volume growth under way 5
Slide 6: Moving Management Closer To The Business
Moving Management Closer To The Business Old structure New structure HQ, Base HQ & & Coal Other Mining & Industrial Iron ore Brazil Met Platinum Copper Nickel Kumba, Platinum & Coal & Ferrous Thermal Coal • 4 divisions • 7 business units • Base and Coal in London • Copper, Nickel & Iron Ore Brazil i
Slide 7: A Major Divestment Programme Under Way
A Major Divestment Programme Under Way • Aim to maximise value for Anglo American; substantial expressions of interest in all businesses so far • February 2010 – Successful divestment of Tarmac European Aggregates and Polish Concrete Products => Proceeds c. $400m Catalão AngloGold Ashanti Tarmac Eur
Slide 8: A Transforming Group Fit For Purpose
A Transforming Group Fit For Purpose • Major Group reorganisation completed • Strong operational performances across all Business Units • Major volume growth underway 8
Slide 9: We Have Outperformed All Our Cost Reduction Targets
We Have Outperformed All Our Cost Reduction Targets • Significant cost reductions of $712m (5%) across the Group • 23,400 reduction in headcount • Major productivity gains across the Group • Asset optimisation and procurement delivering ahead of schedule Real Unit Costs1 Down Across Our Businesses M
Slide 10: AO and Procurement: Delivering Ahead of Schedule
AO and Procurement: Delivering Ahead of Schedule $2bn To Be Delivered From Core Businesses Only Asset Optimisation Procurement Operating Profit Improvements Cost Savings (opex & capex) 1,000 FY '09 Actual 1,000 $8631m FY '11 Target FY '11 Target $1,000m $1,000m 800 800 FY '09 Target $700m FY '09 Act
Slide 11: Platinum: A Transforming Business Now Delivering Results
Platinum: A Transforming Business Now Delivering Results Platinum • Continued progress in safety, 4 month fatality-free record Operating Profit ($m) • Production of 2.4 m oz of platinum achieved • 20% reduction in headcount year-on-year 45 • Cash operating costs kept flat despite inflationary pressu
Slide 12: Iron Ore and Manganese, and Diamonds
Iron Ore and Manganese, and Diamonds Iron Ore and Manganese Diamonds • Operating profit of $1,489m • Operating profit of $64m • Record production at Sishen up 16% to 39.4 Mt • Decisive action in exceptionally challenging • Sishen export sales increase by 37% trading environment • Production cut by 4
Slide 13: Copper and Nickel
Copper and Nickel Copper Nickel • Operating profit of $2,010m • Operating profit of $2m due to a lower nickel price and • Production up 5% adverse local inflationary pressures • Record production at Los Bronces and Collahuasi • Production up 11% (incl. Platinum nickel production) • 6% reduction in u
Slide 14: Coal
Coal Metallurgical Coal Thermal Coal • Operating profit of $451m • Operating profit of $721m • Significant cost reduction and efficiency programme • 25% headcount reduction across all support service completed departments • Headcount reduced by 20%; productivity increased • Mafube at full capacity,
Slide 15: Summary: A Year of Delivery and Outperformance
Summary: A Year of Delivery and Outperformance Start of 2009 End of 2009 Target: Reduced operating cost base Achieved: 5% cost reduction the across Group across the Group 9 Target: Major corporate reorganisation Achieved: Geographically focused operating model 9 Target: Significant headcount reducti
Slide 16: Financial Results
René Médori, Finance Director Financial Results 16
Slide 17: Financial Overview
Financial Overview Underlying EPS - $ Key Financials 4.40 4.36 2.14 $bn 2009 2008 change (1) Operating Profit – Core 4.5 9.0 T 51% 2.90 Operating profit 5.0 10.1 T 51% Effective tax rate 33.1% 33.4% 2.18 2.22 Underlying earnings 2.6 5.2 T 51% 1.46 Capex 4.6 5.1 T 10% 1.23 0.91 EBITDA 6.9 11.8 T 42%
Slide 18: Principal Special Items
Principal Special Items(1) Year Ended 31 December 2009 $ million Net profit on disposals: 1,490 Including: • AngloGold Ashanti Total net proceeds $1,102m • Tongaat Hulett & Hulamin $2.4bn $20m Impairments: (1,990) Including: • Amapá ($1,512m) • De Beers Canada(2) ($267m) Amapá: • Operating asset acq
Slide 19: Full Year Operating Profit Variances
Full Year Operating Profit Variances Total Group ($m) 12,000 10,000 AO upside $779m 8,000 107 82 523 387 256 6,000 3,913 180 10,085 246 539 81 1,524 4,000 Cash cost decrease $712m 4,957 2,000 0 2008 Price Exchange Inflation Volume Throughput - Cash Cost Cash Cost Cash Costs Non cash Associates Struc
Slide 20: Operating Profit Variances: Price
Operating Profit Variances: Price Total Group ($m) MTM Copper impact (2008 to 2009) Avg 2008 Realised Price $2.62/lb Avg 2009 Realised Price $2.68/lb Copper (c/lb) 3,913 c/lb 450 400 350 300 250 31/12/07 31/12/09 200 Prov Pricing $3.02/lb Prov Pricing 150 2,171 31/12/08 $3.34/lb 100 Prov Pricing 50
Slide 21: Operating Profit Variances: Volume / Exchange
Operating Profit Variances: Volume / Exchange Total Group ($m) Volumes 2009 vs. 2008 Shows production volumes unless otherwise stated. Sales +37% Volume variance of +$643m includes +11% Sales Prodn +$256m of AO +16% +5% +16% -4% +0% Throughput Benefit Prodn +3% Platinum Copper Nickel Met Thermal Iro
Slide 22: Operating Profit Variances: Costs
Operating Profit Variances: Costs Total Group Decrease/increase in operating costs ($m) Cash costs decrease $712m or 5% 16,000 Non controllable costs $292m decrease or 2% Controllable costs $420m decrease or 3% 15,500 9 167 107 201 188 63 15,000 15,653 523 15,361 14,500 14,941 14,000 2008 Actual Fue
Slide 23: Capital Expenditure & Cash Flow
Capital Expenditure & Cash Flow Capital expenditure ($m) Net debt ($bn) 77 Opening net debt – 1 January 2009 11.0 Kolomela (1) 459 290 (Sishen South) Operating cash flows (5.8) 401 506 Minas Rio 66 Working capital movement 0.9 338 529 174 Barro Alto 584 Capital expenditure 4.6 32 Los Bronces 1,663 C
Slide 24: Debt Evolution & Gearing
Debt Evolution & Gearing Net Debt Undrawn committed facilities and cash 12 At 31 December 2009, the Group had over $12 billion 10 undrawn committed facilities and cash. 8 In addition, the Group has a $1.4 billion dedicated, ($bn) 6 committed financing facility for Minas Rio, subject to 11.0 11.0 cer
Slide 25: Group Company Balance Sheets
Group Company Balance Sheets De Beers and Anglo Platinum Strengthening the balance sheets of key Group companies • $1bn rights issue. Anglo American to • ZAR12.5bn rights issue. Anglo American committed subscribe for shares in proportion to to following its pro-rata rights (79.7%) and has its shareh
Slide 26: A Transforming Group Fit For Purpose
Cynthia Carroll A Transforming Group Fit For Purpose • Major Group reorganisation completed • Strong operational performances across all Business Units • Major volume growth under way 26
Slide 27: Portfolio Strategy
Portfolio Strategy Our clear strategy is to focus on growth in the most attractive commodities • Structurally the most attractive commodities • Where the Group owns or is developing the most value accretive assets • Where the Group has a competitive advantage Portfolio Choices Grow & Maintain Divest
Slide 28: Projects Will Increase Production By Over 33% By 2013
Projects Will Increase Production By Over 33% By 2013 Existing Approved Unapproved Key Projects Production + Projects + Projects Under Construction 200 Indexed production growth (2009 = 100) 180 +90% Barro Alto 160 140 120 Los Bronces 100 Nickel +33% 80 Copper Minas Rio 60 PGM 40 Met Coal Kolomela T
Slide 29: Approved Copper Growth of 33% by 2013
Approved Copper Growth of 33% by 2013 Los Bronces Copper Brownfield Expansion Chile • Project 27% complete with start up on track for Q4 2011 • Capex $2.3bn - $2.5bn, spend to date $1.0bn • Positioned in the lower half of the cost curve • Will become 5th largest copper mine in the world • Expansion
Slide 30: Approved Nickel production to triple by 2012
Approved Nickel production to triple by 2012 Barro Alto Nickel Project Brazil Construction work 78% complete • Project well advanced with start up on track for Q1 2011 • Capex $1.8bn - $1.9bn, spend to date $1.2bn • Positioned in the lower half of the cost curve • Average operating costs $3.30/lb ($
Slide 31: Approved Iron Ore Projects to Double Production
Approved Iron Ore Projects to Double Production Minas Rio Iron Ore Project Brazil Pump • First production in 2012 with full ramp-up to 26.5 Mtpa in 2013 Station 2 • Revised attributable capex of $3.8bn announced due to scope changes at the pipeline, port, mine and the stronger Brazilian Real • First
Slide 32: Kumba Iron Ore Production To Grow by 20%
Kumba Iron Ore Production To Grow by 20% Kolomela (Sishen South) Iron Ore Project South Africa Kolomela on schedule to start production H1 2012 • Project 45% complete with start up on track for Q2 2012, full production 2013 • Capex $1.02bn; spend to date $367m. • Delivering 9 Mtpa of iron ore • Cons
Slide 33: 2010: Further Growth Options Under Consideration
2010: Further Growth Options Under Consideration Quellaveco set for first approval stage in 2010 Copper Project, Peru • Capex range estimated $2,500 - $3,000m • Currently in feasibility with approval scheduled for H2 2010 • EIS and water process licence progressing • First ore to concentrator Q4 201
Slide 34: Medium and Long Term Outlook Remains Strong
Medium and Long Term Outlook Remains Strong • Medium and long term outlook remains strong • Demand for key metals to remain robust, driven by developing economies • China domestic infrastructure to remain a key driver for demand • OECD countries’ slower growth in the near term Global GDP growth (%)
Slide 35: A Transforming Group Fit For Purpose
A Transforming Group Fit For Purpose • Major Group reorganisation completed • Strong operational performances across all Business Units • Major volume growth in our target commodities A clear strategy in place to deliver shareholder value 35
Slide 36: 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 37: Appendix
Appendix 37
Slide 38: Analysis of Operating Profit
Analysis of Operating Profit $m 2009 2008 Platinum 32 T 2,169 Diamonds 64 T 508 Copper 2,010 S 1,892 Nickel 2 T 123 Iron Ore and Manganese 1,489 T 2,554 Metallurgical Coal 451 T 1,110 Thermal Coal 721 T 1,078 Exploration (172) S (212) Corporate Activities and Unallocated Costs (146) S (219) Core 4,4
Slide 39: Analysis of Underlying Earnings
Analysis of Underlying Earnings $m 2009 2008 Platinum 44 T 1,256 Diamonds (90) T 256 Copper 1,201 S 1,044 Nickel (13) S (35) Iron Ore and Manganese 571 T 1,150 Metallurgical Coal 322 T 764 Thermal Coal 517 T 754 Exploration (167) S (200) Corporate Activities and Unallocated Costs (219) S (486) Core
Slide 40: Market Prices
Market Prices Average Price 2009 2008 Platinum - $/oz 1,211 T 1,585 Palladium - $/oz 266 T 355 Rhodium - $/oz 1,592 T 6,564 Copper – cents/lb 234 T 315 Copper achieved – cents/lb 268 T 262 Nickel – cents/lb 667 T 953 Zinc – cents/lb 75 T 85 40 Source: London Metals Exchange & Johnson Matthey.
Slide 41: Underlying Earnings Sensitivities
Underlying Earnings Sensitivities 10% change in: $m Platinum + 137 Palladium + 17 Metallurgical Coal + 103 Thermal Coal + 147 Copper + 222 Nickel + 39 Zinc + 55 Iron ore + 80 ZAR / USD + 293 AUD / USD + 110 CLP / USD + 29 41 Reflects +/- 10% change on actual results for the year ended 31 December 20
Slide 42: Regional Analysis
Regional Analysis Operating Profit $m 2009 2008 South Africa 2,023 T 5,107 Other Africa 78 T 467 Europe (54) S (183) Americas 2,290 T 2,956 Australia & Asia 620 T 1,738 Operating profit 4,957 10,085 42
Slide 43: Capital Expenditure
Capital Expenditure $m 2009 2008 Platinum 1,150 1,563 Copper 1,068 808 Nickel 554 530 Iron Ore and Manganese 1,044 783 Metallurgical Coal 96 467 Thermal Coal 400 365 Exploration - 1 Corporate Activities and Unallocated Costs 27 26 Core 4,339 4,543 Other Mining and Industrial 268 603 Total Capital Ex
Slide 44: Operating Profit Variance: Exchange
Operating Profit Variance: Exchange Total Group $m 5 4 2 (32) 41 21 (55) By Business Unit (232) (246) Copper Corporate Other Nickel Met Coal Thermal Iron Ore Platinum Total Mining Coal and Industrial $m By Currency 32 16 2 (337) 41 (246) CLP BRL Other AUD ZAR Total 44 Excluding associates.
Slide 45: Operating Profit Variance: Price
Operating Profit Variance: Price Total Group Traded Metals Bulks (1) (2) Copper Nickel Zinc Price - Traded Thermal Price - 5 Tarmac Iron Ore Met Coal Fertiliser Coal Other Bulks 88 (343) (1,742) (649) (328) (486) (20) (444) (169) (82) (1) Includes price impact of molybdenum and other by-products. (2
Slide 46: Cash Cost Movements 2006 - 2009
Cash Cost Movements 2006 - 2009 Controllable costs Non controllable costs 12% +11% +10% 10% 3% 4% 8% Percentage increase in cash costs 6% +5% 1% 4% 7% 7% 2% 4% 2009 0% 2006 2007 2008 -3% -2% -2% -4% -5% -6% Shown on a Total Group basis excluding operations disposed of. 46
Slide 47: Operating Profit Variance: Detailed Cost Reconciliation
Operating Profit Variance: Detailed Cost Reconciliation Total Group Decrease/(increase) in cash costs ($m) (1) Cash costs decrease $712m or 5% Non controllable decrease $292m or 2% Controllable decrease $420m or 3% 1,000 900 800 68 700 600 201 76 17 500 400 523 712 300 9 107 200 167 10 22 100 42 188
Slide 48: Operating Cost Reconciliation
Operating Cost Reconciliation Total Group $m 18,000 17,000 582 283 261 539 16,000 17,442 1,132 70 82 15,000 15,653 630 14,941 14,000 2008 Exchange Volume Inflation Acquisitions & Revenue Other Non-Cash Cash Costs Cash Cost 2009 Disposals Recovered / Savings - AO Commodity and Price-Linked Procuremen
Slide 49: Underlying Earnings Variance
Underlying Earnings Variance Total Group $m 6,000 (2,290) 5,000 5,237 4,000 495 (94) 120 (923) (68) 187 (345) 3,000 250 2,569 2,000 1,000 0 2008 Price Exchange Volume Inflation Cash Costs Non Cash Interest Associates Structural & 2009 Costs Other 49
Slide 50: Overview of Committed Financing
Overview of Committed Financing Summary of the Group’s bonds and committed bank facilities Description Facility Utilisation at Maturity amount 31 Dec 09 Committed bank facilities: GBP 300m Bond $0.5bn $0.5bn 2010 $1.5 billion (due March 2010) EUR 750m Bond $1.1bn $1.1bn 2013 $1.5 billion (due 2012 a