Press Release Archive - 2004

• Headline earnings(1) of $1,694 million ($1.20 per share), 4% lower than 2002. Total profit for the year of $1,592 million, a 2% increase over the prior year.
• Adverse impact of strong South African rand and Australian dollar. Currency movements reduce headline earnings by $578 million. Despite this significant factor, Anglo American maintained a steady earnings and EBITDA(2) performance.
• Strong cash generation: EBITDA of $4.8 billion; EBITDA interest cover(2) of 12.7 times; EBITDA return on total capital(2) of 16.9%.
• Recommended increased final dividend of 39 US cents, giving a total dividend for 2003 of 54 US cents per ordinary share, up 6%.
• Diversified product portfolio underpinned performance: record earnings from Diamonds, strong contributions from Base and Ferrous Metals, Paper and Packaging and Industrial Minerals offset lower earnings from Platinum, Gold and Coal.
• Balanced geographical exposure: split of headline earnings – Europe 26%; South Africa 34%; Americas 18% and Rest of World 22%.
• Key acquisitions delivering value across the Group – Minera Sur Andes (formerly Disputada) contributed $111 million to headline earnings in first year and reported increased reserves.
• Further cost savings and efficiency improvements of $335 million in 2003, significantly ahead of $200 million target.
• $2 billion projects commissioned during the year. Path to growth: $6 billion expansion programme – a strong pipeline of projects across all key commodities.

HIGHLIGHTS FOR THE YEAR TO 31 DECEMBER 2003

(1) See note 7 for basis of calculation of headline earnings.
(2) EBITDA is operating profit before exceptional items plus depreciation and amortisation of subsidiaries and share of EBITDA of joint ventures and associates. EBITDA interest cover is EBITDA divided by net interest expense after adjusting for other net financial income. EBITDA return on capital is EBITDA divided by average total capital. EBITDA is reconciled to net cash inflow from operating activities above the cash flow statement.
(3) See note 2 for definition of net operating assets.

Tony Trahar, Chief Executive, said:

“The Group recorded headline earnings of $1,694 million, a resilient performance during a challenging year for our businesses. This solid achievement reflects our success in building a portfolio of high quality assets and maintaining a balanced geographic and product exposure. Group c ash flow (EBITDA) remained strong and was virtually unchanged at $4.79 billion for the year.

Operating performances were generally very good across the board, though the Group's South African and Australian operations were impacted by a substantially weaker US dollar. This was partially offset by higher dollar prices for gold, diamonds, platinum and base metals and by the further expansion of the Group through acquisition and the commissioning of brownfield and greenfield projects during the year.

Anglo American also benefited from the full year earnings contributions from acquisitions made recently across the Group. Our strategy of pursuing growth through both acquisitions and organic projects is now being reflected in significant production volume growth in most of our product areas.

A major feature was the turnaround in the performance of Base Metals. The integration of the Minera Sur Andes (formerly Disputada) copper operations in Chile has been successfully completed. The business is now well positioned to benefit from stronger prices.

In terms of iron ore, we have delivered our long-term strategic goal of entering the global iron ore market and this will present major expansion opportunities in the medium term.

Our focus on driving returns has produced significant results with group-wide cost cutting programmes. We have consistently exceeded our targets in terms of cost savings and efficiency improvements and over the last two years achieved total savings of just over $600 million.

The positive outlook for a number of our commodities provides an encouraging platform for the year ahead. Improved economic growth in the US and Japan, combined with the strong industrial performance of China, is encouraging. After two decades of generally flat or declining real prices for metals, despite a class of steadily increasing demand, the backdrop for commodities is more positive than it has been for a number of years. Although the potential for a further weakening of the US dollar remains a cause for concern, this is likely to be offset by rising dollar prices for our key commodities.

The Group offers a unique mix of geographic and product diversity which insulates it from the volatility associated with single product cycles. Our gold, platinum, diamond, coal, base and ferrous metals businesses are benefiting from recent price rises and should continue to enjoy steady growth. In addition, paper and packaging and industrial minerals are generating strong cash flows. The Group will also benefit from a number of new projects and recent acquisitions. On the basis of prevailing commodity prices and exchange rates, the Group should achieve good growth in 2004.”

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