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UNAUDITED GROUP INTERIM RESULTS PRESENTATION 2004 For the six months ended 31 December 2003

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Zircon and rutile demand extremely strong due to Chinese growth ... Record synthetic rutile production from Tiwest JV - 112 kt. World no 3 in TiO2 units ... – PowerPoint PPT presentation

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Title: UNAUDITED GROUP INTERIM RESULTS PRESENTATION 2004 For the six months ended 31 December 2003


1
UNAUDITED GROUP INTERIM RESULTSPRESENTATION
2004For the six months ended 31 December 2003
HARNESSING THE POWER OF THE EARTH
www.kumbaresources.com
2
CON FAUCONNIER
CHIEF EXECUTIVE
HARNESSING THE POWER OF THE EARTH
3
KEY FINANCIALS
Revenue R 3 962m
Net operating profit R 566m
Headline earnings R 243m
Headline earnings per share 82 cents
Interim dividend per share 20 cents
Headline EPS
Sound performance despite challenging environment
4
HIGHLIGHTS
  • Improved safety performance
  • Solid operating performance from all businesses
  • Successful start for second furnace at Empangeni
  • Substantial strengthening of the rand (30)
    mitigated by
  • Favourable commodity markets
  • Strong sales volumes
  • Good cost control

Solid operating performance
5
RAND STRENGTH AND COSTS
  • Currency impact 10c ? R 41 m EBIT
  • Cost impact
  • administered prices
  • fuel
  • Ongoing cost and revenue focus

average realised
R10.08
R7.04
Bottom line impacted by exchange rate
6
SHAREHOLDER ISSUES
  • Change in shareholding
  • Competition Tribunal - 5 Sep 2003
  • Anglo offer to minorities - 31 Oct 2003
  • Result 66.6 - 8 Dec 2003
  • Way forward
  • Support for Kumba growth strategy
  • Board of directors

7
MIKE KILBRIDE
EXECUTIVE DIRECTOR OPERATIONS
HARNESSING THE POWER OF THE EARTH
8
SAFETY, HEALTH ENVIRONMENT
Lost day injury frequency rate
  • No fatalities for the period - unfortunately 1 in
    Jan 2004
  • Lost day injury frequency at all time low
  • Strategy to achieve international safety and
    environmental certification at all operations by
    Dec 2004

per million man hours worked
Zero tolerance key focus
9
IRON ORE MARKETS
  • World seaborne trade increased by 50 Mtpa
  • Continued growth of Chinese imports
  • Strong domestic sales
  • 18.62 price increase
  • Freight costs soar

Global seaborne market
Source CRU
Chinese market continues to drive growth
10
IRON ORE OPERATIONS
  • Continued growth in production
  • New calendar year record at Sishen - 27.1 Mt
  • Due to high exports of FY03, low stocks at
    Saldanha influenced exports in 1H04

Total production and exports
New production record
11
OREX RAIL PERFORMANCE
  • Excellent operating efficiencies
  • Continued growth in tonnage railed
  • Capacity expansion to 29 Mt in 2004

Sishen-Saldanha rail performance
Target
Actual
Expansion critical for further growth in exports
12
COAL MARKETS
  • International coal prices influenced by
  • Strong demand for thermal coal
  • Shortage in supply of coking coal
  • Thermal coal supply to Matimba at record levels
  • Strong local demand from the metals market

Thermal coal and coke prices (US/t)
Sources SA Coal Report, CRU
Strong demand-driven market
13
COAL OPERATIONS
  • Record production at Grootegeluk and Leeuwpan
  • Strong focus on cost control

Production volumes
Valuable earnings contributor
14
HEAVY MINERALS MARKETS
  • Signs of recovery in pigment market
  • Titania slag market over-supplied and under
    pressure
  • Zircon and rutile demand extremely strong due to
    Chinese growth

Zircon and pigment prices (US/t)
Source TZMI
Gradual recovery in some segments
15
HEAVY MINERALS OPERATIONS
  • Furnace 2 successfully commissioned in Sep 2003
  • Furnace ramp-up ahead of schedule
  • First chloride slag sales -12 kt
  • Record synthetic rutile production from Tiwest JV
    - 112 kt

Ilmenite feed rate - Ticor SA
of design capacity
World no 3 in TiO2 units
16
ZINC MARKETS
LME Zinc metal price
  • Strong US price recovery
  • Strong currency depressed Rand earnings
  • Lower treatment charges impacted on results

Treatment charge revenue
indexed 1001H02
Rebound in US zinc price
17
BASE METALS OPERATING RESULTS
Rosh Pinah
  • Record Zn concentrate output

Zn conc. (kt)
Zincor
  • Production marginally lower due to planned
    maintenance shut

Zn metal (kt)
Continued improvement at Rosh Pinah
18
INDUSTRIAL MINERALS
  • On track to match record FeSi production of FY03
  • Growing external sales of FeSi
  • Sustained dolomite sales despite weak domestic
    growth

FeSi production (t)
Dolomite sales (Mt)
19
DIRK VAN STADEN
EXECUTIVE DIRECTOR FINANCE
HARNESSING THE POWER OF THE EARTH
20
REVENUE
R million 1H04 1H03 Change
Iron Ore 1 814 2 259 (20)
Coal 855 815 5)
Base Metals 471 485 (3)
Heavy Minerals - Ticor SA - Ticor Ltd 153 623 152 -
Industrial Minerals 43 39 10)
Other 3 20 (85)
Total 3 962 3 770 5)
US/R exchange rate realised 7.04 10.08)
Ticor consolidated from 1 April 2003
21
OPERATING PROFIT / MARGIN
1H04 1H04 1H03 1H03 Change
Rm) () Rm) () (in Rand)
Iron Ore 299) 16) 517) 23 (42)
Coal 121) 14) 125) 15 (3)
Base Metals (35) 47) 10
Heavy Minerals - Ticor SA - Ticor Ltd (9) 48) 8) 20) -) 13
Industrial Minerals 10) 23) 10) 26
Other 132) (17)
Total EBIT 566) 14) 702) 19 (19)
Total EBITDA 886) 944) (6)
Margins impacted by strong Rand
22
EBIT COMPARISON
  • Strong sales volumes
  • Higher iron ore prices
  • Major currency impact
  • Good cost control
  • Ticor Ltd consolidation impact
  • Disposal of non-core assets

R million
Significant currency impact
23
CURRENCY IMPACT
R million 1H04 1H03
EBIT 566) 702)
EBIT excluding non-core asset disposals 447) 702)
Unrealised translation loss/(gain) 6) 150)
Realised exchange rate impact 622)
EBIT excluding exchange rate impact 1 075) 852)
Margin excl. exchange rate () 27) 23)
24
EARNINGS
R million 1H04 1H03 Change
Net operating profit (EBIT) 566) 702) (19)
Net financing cost (130) (123) (6)
Goodwill and impairment (90) (14)
Equity income (13) 30)
Taxation (93) (174)
Profit after taxation 240) 421) (43)
Outside shareholders interest 25) 1)
Attributable earnings 265) 422) (37)
Adjustments (22) 28)
Headline earnings 243) 450) (46)
Headline earnings per share (cents) 82) 152) (46)
Average number of shares in issue (million) 298) 296)
Sound performance
25
CASH FLOW
R million 1H04 1H03
Opening net debt (2 374) (1 143)
Net cash available 606) 335)
Taxation and finance charges (264) (400)
Dividends paid (184) (252)
Net cash flow from operating activities 158) (317)
Net cash used in investing activities
Heavy minerals project capital (270) (406)
Other capital expenditure (348) (154)
Investment in associate (74)
Other 15) 7)
Proceeds from non-core asset sales 173) -)
Share issue 133) -)
Other movements (63) 90)
(Increase)/decrease in net debt (202) (854)
Closing net debt (2 576) (1 997)
Net debt / equity ratio 41
26
RATIOS
R million 1H04 1H03
Margin excluding captive arrangements
EBIT () 18 25
EBITDA () 26 31
Net financing cost cover
EBIT (times) 4.4 5.7
EBITDA (times) 6.8 7.7
Return on equity - attributable income () 5.2 9.1
Net debt / equity () 41 38
27
REPORTING ISSUES
  • Change of year end
  • Consolidation into Anglo American plc
  • Quarterly reports
  • Post interim event
  • ZnErgy
  • Funding constraints at Zoxy
  • Possible impairment impact R 29 m
  • Dividends

28
CON FAUCONNIER
CHIEF EXECUTIVE
HARNESSING THE POWER OF THE EARTH
29
STRATEGIC THRUSTS
  • Iron Ore
  • Hope Downs
  • Northern Cape optimisation
  • Sishen Expansion Project (SEP)
  • Sishen South
  • Coal
  • RBCT Phase 5
  • Inyanda Coal JV (Kalbasfontein)
  • Business Improvement Programme (BIP)
  • Base Metals and Ticor SA
  • Process well on track
  • Group-wide initiative
  • Multi-thrust programme

Focused portfolio with clear strategic direction
30
OUTLOOK
  • Business climate remains challenging
  • Strong currency environments
  • High oil prices
  • Continued domestic cost pressures
  • But, stronger commodity markets
  • Iron ore price increase
  • Higher coal prices
  • Zinc price recovery
  • Therefore, we believe the next 6 months should be
    better

Looking ahead
31
THANK YOU.
HARNESSING THE POWER OF THE EARTH
www.kumbaresources.com
32
ADDITIONAL SLIDES
33
POTENTIAL IRON ORE EXPANSION
Mt design capacity
  • Upcurrent classifier to optimise fines recovery
    adds 0.3 Mtpa fine ore
  • Additional feed to fines and drum plants from
    July 2004, adds 0.7 Mtpa
  • Sishen Expansion Project
  • phase 1 - 3 Mtpa
  • phase 2 - 7 Mtpa
  • New mine at Sishen South 2008

Sishen South
Sishen expansion
current projects
34
COAL PHYSICAL INFORMATION
Coal sales volumes
Coal production volumes
35
HEAVY MINERALS PRODUCTION
Ticor SA
Ticor Ltd
kt 1H04 1H03 change
Ilmenite 128 43 198
Zircon 25 28 (11)
Rutile 9 12 (25)
Pig iron 22 0
Scrap pig iron 6 0
Chloride slag 27 0
Sulphate slag 20 0
kt 1H04 1H03 change
Ilmenite 222 216 3
Zircon 41 34 21
Rutile 16 18 (11)
Synthetic rutile 112 97 (15)
Leucoxene 17 12 42
Pigment 49 49
36
HEAVY MINERALS SALES
Ticor SA
Ticor Ltd
kt 1H04 1H03 change
Ilmenite 40 31 29
Zircon 23 31 (26)
Rutile 12 2 500
Pig iron 10 0
Scrap pig iron 3 0
Chloride slag 12 0
kt 1H04 1H03 change
Ilmenite 43 60 (28)
Zircon 40 45 (11)
Rutile 21 17 24
Synthetic rutile 57 39 46
Leucoxene 15 12 25
37
DEPRECIATION PER SEGMENT
R million 1H04 1H03
Iron Ore 126 114
Coal 75 66
Heavy Minerals 90 28
Base Metals 23 18
Industrial Minerals 2 4
Corporate 4 12
Total 320 242
38
CAPITAL EXPENDITURE
R million FY04 1H04 1H03
Sustaining and environmental 394 172 95
Expansion
Heavy Minerals
- Ticor SA 480 270 406
Group (other) 257 176 59
1 131 618 560
Estimate as per FY03 annual report
39
DEBT STRUCTURE
R million Drawn Undrawn Maturity profile Maturity profile
Long term 2004 744
Corporate 1 263) 2005 842
Heavy minerals project finance 1 145) 2006 558
Ticor Ltd 663) 2007 298
3 071)
Short term 533) 1 466 After 2007 629
Total debt 3 604) 3 071
Cash and cash equivalents (1 028)
Net debt 2 576)
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