Anglo American announces $6.6 billion underlying operating profit

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Financial results reflect improved operational performance, with currency gains offsetting weaker prices

– 6% increase in Group underlying operating profit (1) to $6.6 billion
– Margin improvement: EBITDA margin increased by 2% to 29%; EBIT margin by 1% to 20%
– Effective tax rate increased from 29% to 32%
– 7% decrease in underlying earnings(2) to $2.7 billion; underlying EPS of $2.09
– Special items after tax and non-controlling interest include impairments of $1.9 billion, principally in relation to Barro Alto ($0.7bn), Platinum portfolio review ($0.2bn), Michiquillay ($0.3bn) and Foxleigh ($0.2bn)
– After total special items and remeasurements, loss attributable to equity shareholders of $961 million (2012: $1.5 billion loss)
– Net debt(3) of $10.7 billion as at 31 December 2013 (2012: $8.5bn)
– Attributable ROCE of 11%, in line with 2012

Business performance improving to support operating profit growth

– Improved operational performance, particularly in the fourth quarter, reflecting a greater focus on mining processes, costs and margins
– Impact of lower commodity prices offset by weakening producer currencies
– Kumba Iron Ore – safety stoppages and pit constraints at Sishen, partially offset by strong performance at Kolomela
– Metallurgical Coal – record production, cost reductions and improved product mix more than offset by 24% fall in price
– Copper – record production, led by Los Bronces’ fully ramped up Confluencia plant and higher grades and recoveries at Collahuasi, largely offset by lower realised prices
– Platinum – higher sales volumes supported by rand depreciation, partially offset by input cost increases and lower prices across most metals
– Diamonds – increased production reflecting improved asset performance and customer demand, with higher realised prices

Project update

– Minas-Rio 26.5 Mtpa iron ore (Brazil) – 84% completed and FOOS (First Ore On Ship) target of end 2014; capital expenditure on track at $8.8 billion
– Grosvenor 5.0 Mtpa metallurgical coal (Australia) – longwall production end of 2016; capital expenditure on track at $1.95 billion

Disciplined capital allocation

– $6.3 billion capital expenditure for 2013. Guidance maintained at $7.0 to $7.5 billion for 2014 and expected to reduce in 2015 and 2016
– Final dividend maintained at 53 US cents per share, bringing total dividends for 2013 to 85 US cents per share, reflecting the Board’s commitment to the rebased dividend

Safety

– Regrettably, 14 employees and contractors lost their lives, and two others are missing, in work related incidents
– LTIFR (lost-time injury frequency rate) reduced by 16% to 0.49, the lowest level recorded for the Group
– We are elevating our focus on achieving zero harm in the workplace, through leadership behaviours at every level, business processes and further strengthening of major risk hazard assessments

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