Anglo American plc - Annual General Meeting − Address to shareholders
19 April, 2013
Anglo American plc held its Annual General Meeting for shareholders in London today. Sir John Parker, Chairman, and Mark Cutifani, Chief Executive, made the following remarks:
Sir John Parker, Chairman, Anglo American plc:
Good afternoon, ladies and gentlemen. Many of you, I know, have travelled a long way. May I extend a warm welcome to all of you to the Anglo American plc AGM.
As you all know, 2012 was a very difficult year for the mining industry. Against a backdrop of a marked economic slowdown in China, a troubled euro zone and only a relatively weak and patchy recovery in the United States, the industry faced falling prices, while profitability was further eroded by above-inflation cost increases in many countries.
As a consequence – and in line with a number of our peers – Anglo American experienced a sharp decline in profitability. We reported an underlying operating profit of $6.2 billion, 44 per cent down on the previous year; our underlying EBITDA decreased by 35 per cent to $8.7 billion; while underlying earnings were 54 per cent lower at $2.8 billion.
Our financial and operating performance further suffered as we experienced setbacks in key areas of our business. In South Africa, we encountered lengthy illegal industrial action at our Platinum and Kumba Iron Ore operations – with Anglo American Platinum recording a loss for the year. In the first six months, we also encountered operational setbacks in our Chilean copper business, though I am pleased to say that output there is now on a recovery track. At our flagship Minas-Rio iron ore project in Brazil, a diversity of problems led to a revised delivery date and capital-cost increases. This led us to review the carrying value of this asset, writing it down by $4 billion.
In spite of all these challenges affecting cash flow, the Board was able to recommend a final dividend of 53 cents per share, giving a rebased total dividend for the year of 85 cents, a 15 per cent increase, reflecting our confidence in the underlying business going forward. This increase completes the rebuilding of our dividend since its suspension in 2009 to a new base level competitive with our diversified peer group.
Continuing on a positive note, I should also like to add that the three major new mining operations we have commissioned – Kolomela iron ore in South Africa, Barro Alto nickel in Brazil and our copper expansion at Los Bronces in Chile – are contributing strongly to cash flow.
In 2012, our new mining operations and expansions generated $1.2 billion, almost 20 per cent of total operating profit.
Complementing the underlying cash flows from the business, our capital demands have also been underpinned by the contributions from our successful disposal programme. By year-end, our divestment programme of non-core businesses, as announced in October 2009, had generated proceeds of $4 billion on a debt- and cash-free basis.
Anglo American’s objective is to maintain a strong investment-grade rating – which demands rigorous capital discipline. We recognise only too well that our major capital project, Minas-Rio, has been a much bigger challenge than any of us could have anticipated and that over the next two years we will bear a heavier capital expenditure burden as we seek to complete its development, after which we expect capital expenditure to be moderated.
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