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2016 Interim Results

28 Jul 2016

Balance sheet strengthened through capital and cost discipline – expected to deliver net debt of less than $10 billion at end 2016.

  • Net debt at 30 June 2016 decreased to $11.7 billion (vs. $12.9 billion as at 31 December 2015) through cost discipline and working capital and capex reductions:
    • Attributable free cash flow of $1.1 billion (vs. $0.2 billion in H1 2015)
    • Disposal proceeds of $1.5 billion agreed and expect to be completed in H2 2016
  • Group underlying EBIT(1) of $1.4 billion, a 27% decrease, due to lower commodity prices ($1.2 billion underlying EBIT impact), partially offset by weaker producer country currencies ($0.9 billion underlying EBIT benefit) and incremental cost reductions
  • Operating performance and associated cost and capex reductions mitigating headwinds:
  • Unit costs decreased by 19% (vs. H1 2015) in US dollar terms (Cu eq.)(2)
  • Expect to deliver $1.6 billion(3) of cost and volume improvements in 2016
    • $1.9 billion target included $300 million now reclassified as capex and working capital reduction
    • $0.3 billion of cost and volume improvements delivered in H1 2016(4)
  • Commodity price-driven impairment of $1.2 billion relating to Moranbah and Grosvenor coal assets contributing to a loss before tax of $364 million
Financial highlights
US$ million, unless otherwise stated
6 months ended
30 June
2016
6 months ended
30 June
2015
Change
Underlying EBIT(1) 1,382 1,883 (27)%
Underlying earnings(5) 698 904 (23)%
Group revenue(6) 10,617 13,346 (20)%
Underlying EBITDA(7) 2,450 3,280 (25)%
Loss before tax(8) (364) (1,920) 81%
Loss for the financial period attributable to equity shareholders of the Company(8) (813) (3,015) 73%
Underlying earnings per share (US$)(5) 0.54 0.70 (23)%
Dividend per share (US$) 0.32
Attributable ROCE%(9) 8% 8%

Notes to the highlights and table are shown at the bottom of this section.

Mark Cutifani, Chief Executive of Anglo American, said: "The decisive actions we have taken to strengthen the balance sheet put us well on track to achieve our net debt target of less than $10 billion at the end of 2016 – both through stringent capital and cost discipline and improved operational performance – and assuming the completion of announced non-core asset divestments. We are transforming Anglo American to be a more resilient business, with a core portfolio of world class assets in products where we are developing a sustainable competitive advantage – in De Beers, PGMs and copper.

"Sharply lower prices across our products were mitigated by our self-help actions on costs, volumes, working capital and capital expenditure, together contributing to the $1.1 billion of attributable free cash flow generated in the first half of 2016. Across the business, our copper equivalent unit costs have reduced by 19% in US dollar terms, representing a 36% total reduction since 2012.

"We have agreed $1.5 billion of non-core disposals in H1 2016, including the Niobium and Phosphates businesses in Brazil. We will continue to divest non-core assets using strict value thresholds as we continue to reduce our debt levels and position the core business on a foundation to deliver sustainably positive cash flows.

"Keeping our people safe at work has always been my absolute priority. Despite continued good progress across all recordable cases, we have tragically lost six colleagues in five separate incidents in South Africa in the first six months of the year. We are determined that our goal of zero harm is achievable and we are working with every employee to deliver that future."

(1) Underlying EBIT is operating profit presented before special items and remeasurements, and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT. See notes 4 and 6 to the Condensed financial statements for underlying EBIT. For the definition of special items and remeasurements, see note 7 to the Condensed financial statements.
(2) Copper equivalent unit cost shown on a reported basis.
(3) The $1.9 billion target has been reduced by $0.3 billion due to $0.1 billion working capital reclass and $0.2 billion capital expenditure reclass.
(4) The $0.3 billion is shown gross of a $0.1 billion downside relating to a Platinum stock adjustment recognised in 2015. Q2 2016 run-rate achieved of $0.6 billion.
(5) See notes 6 and 10 to the Condensed financial statements for basis of calculation of underlying earnings.
(6) Includes the Group’s attributable share of associates’ and joint ventures’ revenue of $681 million (H1 2015: $1,788 million). See note 4 to the Condensed financial statements.
(7) Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations, and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT before depreciation and amortisation.
(8) Stated after special items and remeasurements. See note 7 to the Condensed financial statements.
(9) Attributable ROCE is defined as the return on the capital employed attributable to the equity shareholders of Anglo American plc. It is calculated based on achieved prices and foreign exchange.

View full PDF of this press release (1.74 MB, opens in a new window)

For further information, please contact:

Media Investors
UK
South Africa
UK
James Wyatt-Tilby Pranill Ramchander
Paul Galloway Sheena Jethwa
james.wyatt-tilby@
angloamerican.com
pranill.ramchander@
angloamerican.com
paul.galloway@
angloamerican.com
sheena.jethwa@
angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +27 (0)11 638 2592 Tel: +44 (0)20 7968 8718 Tel: +44 (0)20 7968 8680
     
Marcelo Esquivel
Ann Farndell
Edward Kite
marcelo.esquivel@
angloamerican.com
ann.farndell@
angloamerican.com
edward.kite@
angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +27 (0)11 638 2786 Tel: +44 (0)20 7968 2178

Notes to editors:
Anglo American plc is a globally diversified mining business. Our portfolio of world-class competitive mining operations and undeveloped resources provides the raw materials to meet the growing consumer-driven demands of the world’s developed and maturing economies. Our people are at the heart of our business. It is our people who use the latest technologies to find new resources, plan and build our mines and who mine, process and move and market our products – from diamonds (through De Beers) to platinum and other precious metals and copper – to our customers around the world.

As a responsible miner, we are the custodians of those precious resources. We work together with our key partners and stakeholders to unlock the long-term value that those resources represent for our shareholders, but also for the communities and countries in which we operate – creating sustainable value and making a real difference.
www.angloamerican.com

Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 28 July 2016, can be accessed through the Anglo American website at www.angloamerican.com

Note: Throughout this results announcement, ‘$’ denotes United States dollars and ‘cents’ refers to United States cents; underlying EBIT is operating profit presented before special items and remeasurements and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT; special items and remeasurements are defined in note 7 to the Condensed financial statements. Underlying earnings, is calculated as set out in note 6 and note 10 to the Condensed financial statements. Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations and includes the Group’s attributable share of underlying EBITDA of associates and joint ventures before depreciation and amortisation. Tonnes are metric tons, ‘Mt’ denotes million tonnes and ‘kt’ denotes thousand tonnes, unless otherwise stated.

Forward-looking statements:
This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Anglo American’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American’s products, production forecasts and reserve and resource positions), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’s most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the “Takeover Code”), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share.

Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third party sources. As such, it presents the views of those third parties, though these may not necessarily correspond to the views held by Anglo American.

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