Rio Tinto Plc · LSE:RIO
Rio Tinto — FY2009 Earnings Presentation
34 slides from Rio Tinto's earnings presentation, Feb 11, 2010
Slide 1: Rio Tinto 2009 Full Year Results
o, R > 0) oO > a cy a 2 S OI i=) , i=) N > = © = pas 2 ® LL r r RioTinto
Slide 2: Forward-looking statements
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consisting of the slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions. Forward-looking statements This presentation incl
Slide 3: Chairman
Chairman
Slide 4: Chairman's summary of 2009 results
• Commendable results in a rapidly changing macro environment • Recapitalised balance sheet; $20 billion reduction in net debt • Significant progress with divestment programme • Second half momentum from higher prices and actions taken • Continuing strong operational performance; $2.6 billion cost s
Slide 5: Price resurgence and commodity outlook
• Price resurgence across most of our key commodities driven by government stimulus measures • Factors that drove upturn will continue through 2010 – China expected to grow at over 9 per cent – OECD coming out of recession • Risks remain in the short to medium term – Wind-back of government stimulus
Slide 6: Chief executive officer
Tom Albanese. ‘Chief executive one ms a O = = O
Slide 7: Rio Tinto 2009 full year results
11 February 2010 Rio Tinto 2009 full year results 7
Slide 8: Highlights
Highlights • Strong volume growth delivered in iron ore, copper and gold • Achieved year on year operating cost savings of $2.6 billion • Aluminium business turnaround • Significant price recovery in second half • Key divestments completed *H208 and H109 underlying EBITDA include $0.5 billion and $0
Slide 9: Iron ore 2009 highlights
! " 2009 highlights • Strong demand growth driven by China • 2010 iron ore demand growth to outstrip supply • Record annual sales and production from the Pilbara • Pilbara production run-rate in excess of 220mtpa nameplate capacity throughout second half • High levels of shipments to customers in Ch
Slide 10: Iron ore: long term outlook and expansions
" • Long term outlook remains strong • First production from Mesa A, Brockman 4 to follow shortly • Incremental capacity increases to add considerable value • Expansions to 225mtpa and studies to 230mtpa by 2012 underway • Evaluation of Pilbara 330mtpa expansion progressing well • Further Pilbara ex
Slide 11: Western Australia iron ore production joint venture
# $ • Good progress towards formation of production joint venture • Regulatory process underway • More tonnes faster, at lower cost • Estimated synergies totalling in excess of US$10 billion NPV • Both companies will independently market iron ore globally 11 February 2010 Rio Tinto 2009 full year re
Slide 12: 2009 highlights: financial performance
2009 highlights • Resurgence in prices in the second half • $1.0 billion EBITDA and $0.8 billion earnings improvement in 2H vs 1H boosted by cost initiatives • Cash cost savings of $1 billion in 2009 • Tight control on cash – 10 day improvement in working capital days half on half – Sustaining capit
Slide 13: Aluminium: four major initiatives driving improvements
Four major initiatives are driving improvements 1. Delivered on synergies and integration targets • $441 million synergies in H2 2009 bringing total to $924 million for 2009 • $1.1 billion run rate achieved at the end of 2009 • Expect to deliver $1.2 billion in 2010 2. Permanent closure of Anglesey
Slide 14: Copper 2009 highlights
2009 highlights • Rebound in prices in 2009 following surge in Chinese imports • >$550 million year on year volume benefit following improved operating performance and higher grades at Kennecott Utah Copper and higher grades at Grasberg • 1.1m oz mined gold production • Rio Tinto stake in Ivanhoe ra
Slide 15: Energy 2009 highlights
% 2009 highlights • Robust seaborne market for Australian coal, as China became a significant importer • Improvements to infrastructure constraints underway – Port Waratah expansion to 113mtpa completed in fourth quarter of 2009: examining options to expand to 145mtpa • US coal earnings reflect high
Slide 16: Diamonds and minerals 2009 highlights
&' ( ) 2009 highlights • Demand recovery lags other product groups due to OECD focus – Shutdowns in 2009 to balance production with market demand – Some improvements in markets in fourth quarter • Challenging market conditions for Iron & Titanium • Prices compensated for lower volumes at Minerals •
Slide 17: Chief financial officer
Guy Elliott Chief financial i q- _; 4a Oo = = ©
Slide 18: Debt maturity profile
Note: Debt maturity profile is as at 31 December 2009. $2 billion of the 2012 maturity was repaid early on 31 January 2010 11 February 2010 Rio Tinto 2009 full year results 18
Slide 19: Divestment programme
$ Asset Price (US$m) Completed Greens Creek, Cortez, Kintyre, other 3,074 2008 Ningxia, sundry exploration properties 193 Corumbá and potash assets 1,664 Jacobs Ranch 764 2009 Cloud Peak Energy (52%) 741 Alcan Engineered Products Composites 349 Alcan Packaging global pharma, tobacco, food Europe and
Slide 20: Rio Tinto 2009 full year results
" " 11 February 2010 Rio Tinto 2009 full year results 20
Slide 21: Commodity price changes
+" " Note: Change in price relative to 31 December 2007 11 February 2010 Rio Tinto 2009 full year results 21
Slide 22: Underlying earnings variance
, " Note: Exploration and Evaluation variance includes $314 million net increase in gain on undeveloped property sales 11 February 2010 Rio Tinto 2009 full year results 22
Slide 23: Controllable cost reductions
-. / 2009 highlights • Controllable pre-tax cost reductions of $2.6 billion achieved in 2009 • 16,000 role reductions in first half • Reduced SG&A • Greater leverage through group procurement • Exploration, evaluation and technology spend reduced • Input price pressure expected in 2010 Note: Control
Slide 24: Capital expenditure
0 " " 1 • Rigorous process to prioritise capital expenditure • Growth has been underpinned by continued investment in key projects • Capex adjusted to reflect current conditions • Capex expected to be at least $5 billion in 2010 • Potential for further capital investment of up to $1 billion 11 Febru
Slide 25: Dividends
1 2008 2009 20101 Interim USc/share 68 - 45 Total payout ($m) 850 - 882 Payment date Sep 2008 n/a Sep 2010 Final USc/share 68 45 45 Total payout ($m) 876 882 882 Payment date Apr 2009 Apr 2010 Apr 2011 • Final dividend of 45 US cents per share • Expect aggregate cash dividend in respect of 2010 to b
Slide 26: Chief executive officer
Chief executive officer
Slide 27: Key mines and mining projects map
# " Key Mines and mining projects Smelters, refineries and processing plants remote from mine Aluminium Copper Diamonds Energy Iron ore Minerals 11 February 2010 Rio Tinto 2009 full year results 27
Slide 28: Growth in non-OECD markets
! " • Growth in non-OECD markets will support higher prices over the longer term • China is key • But India is set to follow – 15 years behind China – Less commodity intensive 11 February 2010 Rio Tinto 2009 full year results 28
Slide 29: Targets and achievements
2 Target Achieved Reduce controllable operating costs Controllable operating costs reduced by at least $2.5 billion per annum in by $2.6 billion in 2009 2010 Reduction in global headcount of Global headcount reduced by around 14,000 roles 16,000 in first half 2009 Reduce net debt by $10 billion by e
Slide 30: Priorities for 2010
+" 3 " • Strong demand to continue through 2010 but with some risks and volatility Priorities for 2010 • Focus on operational delivery • Transformation of our aluminium business to continue • Pursue growth path through disciplined capital expenditure • Complete the Western Australian iron ore produc
Slide 31: 2009 full year results
20009 full year results 11:February 201 o ; Oo = = ©
Slide 32: Rio Tinto 2009 full year results
4 " 11 February 2010 Rio Tinto 2009 full year results 32
Slide 33: Rio Tinto 2009 full year results
4 " 11 February 2010 Rio Tinto 2009 full year results 33
Slide 34: Earnings sensitivity
2009 average Impact on full year Earnings sensitivity price/rate underlying earnings ($m) Copper 232c/lb +/-23c/lb 268 Aluminium $1,665/t +/-$167/t 465 Gold $970/oz +/-$97/oz 63 Molybdenum $11/lb +/-$1.1/lb 20 Iron ore +/-10% 638 A$ 79 USc +/-US7.9c 444 C$ 88 USc +/-US8.8c 171 11 February 2010 Rio T