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REVIEWED GROUP INTERIM RESULTS For the twelve months ended 30 June 2004 PRESENTATION 2004 HARNESSING THE POWER OF THE EARTH www.kumbaresources.com.

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Presentation on theme: "REVIEWED GROUP INTERIM RESULTS For the twelve months ended 30 June 2004 PRESENTATION 2004 HARNESSING THE POWER OF THE EARTH www.kumbaresources.com."— Presentation transcript:

1 REVIEWED GROUP INTERIM RESULTS For the twelve months ended 30 June 2004 PRESENTATION 2004 HARNESSING THE POWER OF THE EARTH

2 2 CON FAUCONNIER CHIEF EXECUTIVE HARNESSING THE POWER OF THE EARTH

3 3 KEY FINANCIALS RevenueR8 454m Net operating profit R1 101m Headline earningsR580m Headline earnings (cps) Interim dividend (cps) 35 Headline EPS (cps) Stronger second half

4 4 HIGHLIGHTS Record safety performance Good progress on HIV / AIDS programme Solid operating performance from all businesses Strong US$ commodity prices… but Pleasing safety performance

5 5 RAND IMPACT Continued Rand strength (24% appreciation y-o-y) mitigated by: Strong sales volumes Good hedging policy – contributing R81m Business improvement programme Continued impact by strong Rand R/US$AU$/US$ (average realised) 2H02 1H03 2H03 1H04 2H04

6 6 BUSINESS IMPROVEMENT PROGRAMME To maintain an attractive return in a prolonged strong rand environment R800m EBIT contribution Cost and revenue focus Shared services optimisation Programme Detailed planning All improvements implemented during 2005 Full financial benefits in 2006 Crucial in strong Rand environment

7 7 MIKE KILBRIDE EXECUTIVE DIRECTOR OPERATIONS HARNESSING THE POWER OF THE EARTH

8 8 SAFETY & ENVIRONMENT Safety Fatalities at all time low Lost Day Injury Frequency Rate (LDIFR) at record low level Environment Environmental management programmes approved for all operations ISO Certification 4 Business units certified ISO Business units certified OSHAS All operations by December 2004 Zero tolerance… key focus Fatalities LDIFR

9 9 IRON ORE MARKETS Strong growth in global blast furnace output Continued growth in Chinese imports of iron ore (148 Mt last year) Price increase of 18.6% effective 1 April 2004 Global blast furnace output Source: AME Kumba well positioned for blast furnace demand

10 10 IRON ORE OPERATIONS Total production exceeds 30 Mt New record at Sishen Mt Exports influenced by stock build-up Strong domestic sales Continued growth in iron ore output Total production and exports

11 11 IRON ORE EXPORT CHANNEL Record tonnage railed of 21.9 Mt Port expansion on track for completion by end of 2005 Negotiations underway for further 12 Mtpa expansion by 2008 Sishen-Saldanha rail performance Infrastructure expansion is key to future growth

12 12 COAL MARKETS Total sales to Eskom Mt Record sales to Matimba Mt Strong domestic and international demand Thermal coal and coke prices (US$/t) Sources: SA Coal Report, CRU

13 13 COAL OPERATIONS Excellent safety results at each coal mine Total coal production exceeds 19 Mt Annual record production at Grootegeluk and Leeuwpan Production volumes Solid operating performance at all mines

14 14 HEAVY MINERALS MARKETS Signs of recovery in pigment market Zircon, rutile and pig-iron in strong demand Titania slag market over- supplied First sales of slag and pig-iron Good sales of synthetic rutile Zircon and pigment prices (US$/t) Source: TZMI

15 15 Excellent synthetic rutile and pigment production at Tiwest Good growth in slag and pig-iron production from SA operations Planned shut of furnace 2 for improvements and repair Heavy minerals production Good growth in production of key products HEAVY MINERALS OPERATIONS

16 16 ZINC MARKETS US$ zinc price recovery Depressed Rand price Low treatment charges prevail Zinc metal price Source: LME Challenging market conditions persist

17 17 BASE METALS OPERATING RESULTS Sustained record production at Rosh Pinah Chifeng refinery expansion on schedule Zincor metal production affected by concentrate quality Zn metal (kt) Zn conc. (kt) Refinery in China contributes to zinc metal output

18 18 INDUSTRIAL MINERALS Dolomite sales (Mt) FeSi production (t) Good production levels maintained Solid financial contribution

19 19 DIRK VAN STADEN EXECUTIVE DIRECTOR FINANCE HARNESSING THE POWER OF THE EARTH

20 20 REVENUE R million12M04FY03% Change Iron Ore (7) Coal )7) Heavy Minerals - Ticor SA - Ticor Ltd ) Base Metals ) Industrial Minerals877812) Other840(80) Total ) R/US$ exchange rate realised

21 21 EBIT / MARGIN 12M04FY03% Change Rm)(%)Rm)(%)(in Rand) Iron Ore673)17882)21(24) Coal310)18279)1711) Heavy Minerals - Ticor SA - Ticor Ltd (25) 75)6 24) 38) ) Base Metals(45)(9) Industrial Minerals20)2321)27(5) Other93)(46) Total EBIT1 101) )16(7) Total EBITDA1 865)1 744)7)7)

22 22 EBIT COMPARISON R million Production cost Sales growth and cost focus

23 23 CURRENCY IMPACT R million12M04FY03 EBIT1 101)1 189) Adjusted for: Asset disposals (122)-)-) Non-recurring items 189)-)-) Price increases (809) Unrealised translation loss/(gain) (7)73) Realised exchange rate impact 1 162) Comparable EBIT1514)1 262) Comparable EBIT margin17) Rand appreciation reduces margin

24 24 EARNINGS R million12M04FY03% Change EBIT1 101)1 189)(7) Net financing cost(268)(244)(10) Equity (loss)/income(29)2)2) Taxation(253)(229)(10) Profit after taxation551)718)(23) Minority interest(23) Attributable earnings528)718)(26) Attributable earnings per share (cents) 177)242)(27) Total dividend for the period 55 cps

25 25 HEADLINE EARNINGS R million12M04FY03% Change Attributable earnings528)718)(26) Post tax adjustments: Impairment charges 98)2)2) Net surplus on asset disposals (103)(2) Closure cost 24)-)-) Goodwill and exceptionals 33)66) Headline earnings580)784)(26) Headline earnings per share (cents)195)264)(26) Average number of shares in issue (million) 298)297) HEPS 195 cps

26 26 CASHFLOW R million12M04FY03 Opening net debt2 374)1 143) Net cashflow from operating activities818)780 Net cash used in investing activities New capacity(759)(1 122) Other capital expenditure(314)(264) Net impact of Ticor Ltd consolidation-)-)(559) Asset disposals208)44) Share issue133)-)-) Non cashflow movements36)(110) (Increase)/decrease in net debt122)(1 231) Closing net debt2 252)2 374) Positive operational cashflow

27 27 RATIOS 12M04FY03 Margin excluding captive arrangements EBIT (%)1722 EBITDA (%)2528 Net financing cost cover EBIT (times) EBITDA (times) Return on equity - attributable income (%)1115 Net debt / equity (%)3639 Solid financial metrics

28 28 CON FAUCONNIER CHIEF EXECUTIVE HARNESSING THE POWER OF THE EARTH

29 29 STRATEGY Empowerment MPRDA - effective 1 May Kumba well placed to conform Coordinating with Anglo on empowerment ownership process Iron ore growth Hope Downs Northern Cape expansion projects Coal growth Inyanda Coal JV Leeuwpan expansion Grootegeluk market coke project Heavy minerals: Fairbreeze Longer term potential Iron ore – Faleme (Senegal) Heavy minerals – Toliara Sands (Madagascar) Coking coal - Moranbah South (Australia) Robust project pipeline

30 30 OUTLOOK Positive factors Strong commodity markets Sustained excellent operating performance Business improvement initiatives BUT: Rand strength and volatility poses major risk to the resource sector Strain on cash flow from operations Impact on new projects Therefore, if the Rand stays at recent levels, we are unlikely to improve on earnings

31 THANK YOU. HARNESSING THE POWER OF THE EARTH

32 32 ADDITIONAL SLIDES

33 33 REVENUE CONTRIBUTION FY0312M04

34 34 EBIT CONTRIBUTION FY0312M04

35 35 IRON ORE PHYSICAL INFORMATION Production volumesSales volumes

36 36 COAL PHYSICAL INFORMATION Production volumesSales volumes

37 37 HEAVY MINERALS INFORMATION Production volumesSales volumes

38 38 DEPRECIATION PER SEGMENT R million12M04FY03 Iron Ore Coal Heavy Minerals19192 Base Metals4541 Industrial Minerals66 Corporate621 Total644532

39 39 CAPITAL EXPENDITURE R million12M04FY03 Sustaining and environmental Expansion Ticor SA Group (other)

40 40 DEBT STRUCTURE R millionDrawnUndrawnMaturity profile Long term Corporate1 734) Ticor SA project finance1 126) Ticor Ltd630) ) Short term-)-)2 188After Total debt3 490)3 490 Cash and cash equivalents(1 238) Net debt2 252)

41 41 PROJECT CAPITAL EXPENDITURE Project Implementation date (start) Estimated capital cost Hope Downs2007AU$1.7bn Sishen Expansion Project (SEP)2007R2.4bn Sishen South2005R2.0bn Faleme2010US$950m Leeuwpan expansion2005R91m Inyanda Coal JV (50%)2007R186m Grootegeluk market coke project 2005R344m Fairbreeze2007R516m


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