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14 February 2014

2013 Preliminary Results

Anglo American announced its 2013 preliminary results at 07:00 (UK time) on Friday 14 February.

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  • 6% increase in Group underlying operating profit to $6.6 billion
  • Margin improvement: EBITDA margin increased by 2% to 29%; EBIT margin by 1% to 20%
  • 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
  • $6.3 billion capital expenditure for 2013. Guidance maintained at $7.0-7.5 billion for 2014 and expected to reduce in 2015 and 2016
  • 7% decrease in underlying earnings to $2.7 billion; underlying EPS of $2.09
  • Achieved attributable ROCE of 11%, in line with 2012
  • 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 to align with customer demand, with higher realised prices
  • 6% increase in Group underlying operating profit 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 to $2.7 billion; underlying EPS of $2.09
  • After special items and remeasurements of $3.6 billion, loss attributable to equity shareholders of $961 million
  • Net debt of $10.7 billion as at 31 December 2013 (2012: $8.5 billion)
  • Achieved attributable ROCE(5) of 11%, in line with 2012

In the near term, the world economy is expected to strengthen in 2014 and 2015 as it continues to emerge from the challenges of the global financial crisis. China should continue to grow by around 7% and the diminishing effects of fiscal tightening should support a firmer recovery in the US and beyond.

In the medium term, the US, Europe and Japan should experience a normalisation of their underlying economic growth rates as the impact of the financial crisis fades. A successful reform programme in China should lay the foundations for more sustainable growth. Looking beyond the short-term hiatus in emerging markets, we expect continuing robust growth in the medium to longer term as they benefit from continued convergence of living standards.

In China and other emerging economies, there remains significant potential for further urbanisation and industrialisation to support robust growth and demand for key commodities, including crude steel (iron ore, and metallurgical coal), copper, nickel and thermal coal. The emergence of the expanding middle class will support rising intensity of consumption for the later cycle products in Anglo American’s portfolio – PGMs and diamonds – and will also benefit the phosphates business.

Supply growth in the near to medium term poses challenges to the prices of some global commodities, most notably iron ore and copper. However, in the long term, prices for Anglo American’s products are expected to be supported by supply constraints in many jurisdictions and the challenges producers face in bringing new supply into production. Economic uncertainty, as we are seeing currently, tends to restrain new supply; in the longer term Anglo American therefore expects to see tightening market fundamentals and a recovery in price performance.

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