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Anglo American sets out radical portfolio restructuring and further material cost savings and capex reductions
Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name JSE: Anglo
Share code JSE: AGL
Short name NSX: Anglo-AMRC NM
Share code NSX: ANM
ISIN number: GB00B1XZS820
(the "Company")
8 December 2015
Anglo American sets out radical portfolio restructuring and further material cost savings
and capex reductions
Anglo American plc (“Anglo American” or “the Company”) is today setting out an accelerated
and more radical restructuring programme to redefine the focus of its asset portfolio to
transform the Company’s competitive position and create a more resilient business to deliver
sustainable shareholder returns.
Mark Cutifani, Chief Executive of Anglo American, said: “Together with the additional material
capital, cost saving and productivity measures announced today, we are setting out an
accelerated and more aggressive strategic restructuring of the portfolio to focus it around our
‘Priority 1’ assets, being those assets that are best placed to deliver free cash flow through the
cycle and that constitute the core long term value proposition of Anglo American. While we
have continued to deliver our business restructuring and performance objectives across the
board, the severity of commodity price deterioration requires bolder action. We will set out the
detail of the future portfolio in February, with the aim of delivering a resilient Anglo American
and a step change in the transformation of the Company”.
Key highlights to be set out in the presentation include:
Radical portfolio restructuring
- Focus on Priority 1 assets to deliver free cash flow and greater returns through the cycle –
number of assets to be reduced by ~60%
- Corporate structures and overhead to be aligned to future portfolio
o Consolidate from six to three businesses: De Beers, Industrial Metals, Bulk
Commodities
o London office co-locating with De Beers in 2017
Driving operational discipline
- $3.7 billion of cost and productivity improvements targeted from 2013 to 2017:
(1)
o $1.6 billion delivered by end 2015 , including $0.3 billion in 2H15
o $1.1 billion in 2016
o $1.0 billion in 2017, with potential to accelerate in part into 2016
- Care & maintenance / closure of cash negative assets – Snap Lake C&M, Thabazimbi
closure
Protecting the balance sheet
- Capex reductions expected of a further c.$1 billion
(2)
to the end of 2016
Anglo American plc
20 Carlton House Terrace London SW1Y 5AN United Kingdom
Tel: +44 (0)20 7968 8888 Fax: +44 (0)20 7968 8500
Registered office as above. Incorporated in England and Wales under the Companies Act 1985. Registered Number 3564138
(3)
o $2.9 billion aggregate capex reduction vs. original guidance for 2015-2017
o $2.5 billion capex in 2017, a c.55% reduction vs. 2014
o SIB & capitalised stripping capex reduction of 30% from 2014 to $2.0 billion in 2016
- Disposals target increased to $4.0 billion – Phosphates and Niobium confirmed for sale
o c.$2.0 billion asset disposals agreed to date
- Dividend suspended in respect of 2H15 and 2016 – upon resumption, policy will change to
pay-out ratio to provide flexibility through the cycle and clarity for shareholders
- Net debt guidance at end 2015 unchanged at $13.0 - 13.5 billion, despite price deterioration
- c.$15 billion of liquidity maintained and limited refinancing required in 2016 of $1.6 billion
- Expected impairments of $3.7 - $4.7 billion, largely due to weaker prices and asset closures
Mark Cutifani added: “As we redefine our operational footprint, we are aligning our organisation
to ensure optimal efficiency and effectiveness. As a next step and as we determine the future
portfolio, we will be consolidating our six business unit structures into three – De Beers,
Industrial Metals and Bulk Commodities – providing further opportunity to reduce the cost
burden on our business.”
“Our work to drive out costs and increase productivity will have delivered $1.6 billion of benefit
by the end of 2015, following our volume reductions in De Beers and Kumba. By the end of
2017, we expect to have delivered a total of $3.7 billion of such efficiency improvements, made
up of productivity, operating costs and indirect costs.
“We are taking further steps to protect the balance sheet and reduce leverage. We are reducing
2015 and 2016 capex by an additional c.$1 billion and have reduced our 2017 capex to $2.5
billion, a c.55% reduction versus our 2014 expenditure. SIB and capitalised stripping capex is
also reduced substantially to reflect the prioritised allocation of capital, while ensuring the
ongoing integrity of our assets. We are increasing our targeted disposal proceeds to $4 billion
and will be progressing the sale process for the Phosphates and Niobium businesses during
2016. The Board has also taken the decision to suspend dividend payments in respect of the
balance of 2015 and 2016. Upon their resumption, the dividend policy will reflect a pay-out ratio
to provide flexibility through the cycle and clarity for shareholders.”
The presentation, which will be available on the Anglo American website, will begin at 9.00am
(UK time) and can be viewed via live webcast: www.angloamerican.com/investors.
The following members of Anglo American’s management team will present:
Mark Cutifani Chief Executive
René Médori Finance Director
Tony O’Neill Technical Director
Philippe Mellier CEO, De Beers
The presentation is expected to finish at 11.00am (UK time).
Notes:
(1)
$1.6bn delivered includes $0.3bn cost reduction expected to be achieved in 2H15, offset by
$0.4bn as a result of volume reduction strategies (mainly De Beers)
(2)
Guidance vs. most recent guidance in July 2015
(3)
Guidance vs. original December 2014 guidance
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 8718
South Africa Ed Kite
Pranill Ramchander Tel: +44 (0)20 7968 2178
Tel: +27 (0)11 638 2592
Shamiela Letsoalo
Tel: +27 (0)11 638 3112
Sponsor: UBS South Africa (Pty) Ltd
Notes to editors:
Anglo American is a global and diversified mining business that provides the raw materials
essential for economic development and modern life. 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 bulk commodities
and base metals to precious metals and diamonds (through De Beers) – to our customers
around the world. Our diversified portfolio of products spans the economic development cycle
and, as a responsible miner, we are the custodians of 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. Our mining operations, growth
projects and exploration and marketing activities extend across southern Africa, South America,
Australia, North America, Asia and Europe.
www.angloamerican.com
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