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Event Brief of Full Year 2008 Anglo American Plc Earnings Presentation - Final.

Article Excerpt
PARTICIPANTS

. Cynthia Carroll, Anglo American Plc, CEO . Rene Medori, Anglo American Plc, Finance Director . Gareth Penny, Anglo American Plc, De Beers Managing Director . Jason Fairclough, Merrill Lynch, Analyst . Rob Clifford, Deutsche Bank, Analyst . Des Kinley, RBC, Analyst . Andy Mood, Analyst . Sam Catalano, Macquarie Securities, Analyst . Louis Vitter, TSEC, Analyst . Martin Creamer, Mining Weekly, Media . Tim Clark, Deutsche Bank, Analyst . Charles Kernot, Evolution Securities, Analyst . Peter Davey, BJM, Analyst

OVERVIEW

AAUKD reported 2008 underlying earnings of $5.2b and EPS of $4.36.

FINANCIAL DATA

A. Key Data From Call 1. 2008 underlying earnings = $5.2b. 2. 2008 operating profit = $9.8b. 3. 2008 EPS = $4.36. 4. 2008-end net debt = $11b. 5. 2008 share repurchase = $600m.

PRESENTATION SUMMARY

S1. 2008 Business Review (C.C.) 1. Highlights: 1. 2008 was record year of two halves. 1. 1H produced strong performance from all businesses. 2. 2H saw most metal prices decline severely as global economic downturn accelerated. 1. Despite this, generated record operating profit of $9.8b. 2. Review: 1. Drive for Zero Harm across operations starting to make progress. 2. Awarded new order mining rights across its South African mining operations. 1. Provided stronger platform for Group's long-term development projects in South Africa. 3. Drove asset optimization program through organization. 1. Announced new $1b AOS profit improvement target by 2011. 4. Continued to focus on core mining businesses and made further disposals. 1. Sold: 1. Namakwa Sands. 2. 26% interest in Black Mountain and Gamsberg. 3. Tarmac Iberia. 4. Stake in Shenhua. 2. Reduced stake in AngloGold Ashanti to 11.8% since start of this year. 5. Advanced long-term iron ore growth strategy by securing 100% ownership of multiphase Minas-Rio iron ore project in Brazil. 6. Taken number of decisive actions to position Co. through current difficult market environment. 1. Reduced 2009 CapEx by 50% to $4.5b. 2. Accelerated many cost reduction programs. 3. Suspended dividend. 1. Committed to resuming dividend payments as soon as market conditions allow. 3. Safety: 1. Saw major safety improvement last year across the Group. 2. Number of fatalities at managed operations reduced by one-third. 3. Lost Time Injury frequency rate, 17% YonY improvement. 4. Had extended periods of incident free safe production. 1. Anglo Platinum's Union Mine in South Africa achieved more than 6m Fatality Free Shifts. 2. Barro Alto nickel project in Brazil worked for 966 days without a Lost Time Injury. 3. Anglo Ferrous Brazil recorded 3.5m hours without a Lost Time Injury. 5. Above achievements were due to: 1. Improved safety practices in 2007. 2. Renewed commitment to new level of safety performance. 3. Safety initiatives Co. is rolling out to ensure systematic approach to managing safety and preventing accidents. 4. Precious Metals: 1. Platinum: 1. Delivered operating profit of $2.2b, 17% reduction due to: 1. Lower sales volume. 2. Planned lower ore grades. 3. Higher input cost. 2. 2H08 saw strong improvement on 1H08 producing 1.39m ounces for total of 2.39m ounces. 3. Taking measures to adjust business to current market. 4. Reduced CapEx and headcount, further cost cutting initiatives, and lower input costs are planned for 2009. 1. Expected to maintain positive at planned reduced production level of 2.4m ounces in 2009. 5. Expects platinum market to be balanced in 2009. 1. This should ensure price above $1,000 per ounce on avg. for the year. 6. Expects falling car production, stock levels, and anticipated fall in industrial demand to be offset by increased jewelry and investment demand. 7. Will continue to monitor price and demand and make further production cuts as necessary. 2. Diamonds: 1. Group's share of De Beers operating profit increased 5% to $508m driven by: 1. Strong 1H08 sales at diamond trading co. 2. Element Six. 2. Production of 48.1 carats (sic - see press release) was 6% lower than 2007. 1. Expected to reduce significantly in 2009. 5. Base Metals: 1. Despite higher production at Los Bronces, Mantoverde, and Collahuasi, operating profit of $2.5b was 42% lower than 2007 due to: 1. Sharply lower base metal prices. 2. $591m loss on provisional pricing of copper. 3. Lower sales volumes. 4. Increases in key input costs. 2. Any improvement in demand would support sustained price recovery helped by: 1. Persistent supply side constraints in copper. 2. Closure of operations and deferral of projects in nickel and zinc. 6. Industrial Minerals: 1. Tarmac maintained its market share despite difficult 2H08. 2. Tarmac International operating profit, flat on like-for-like basis. 1. Delivered cost savings of over $100m in the period. 7. Bulks: 1. Coal: 1. Operating profit increased more than 3 times to record $2.2b driven by: 1. Higher coal prices. 2. Increased production to over 99m tons. 3. Improved operating efficiencies. 2. Rapid decline in steel production lowered demand for met coal. 1. Plans to grow met coal production by 10% in 2009 have been halted. 3. As a result, expects output to be marginally below 2008. 2. Ferrous Metals & Industry: 1. Doubled operating profit to $2.9b achieved through higher: 1. Iron ore sales and prices. 2. Manganese alloy and ore prices. 2. Iron ore production from Sishen increased 13% to 36.7m tons. 3. Expects 2009 iron ore production at Kumba...

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