FT Alphaville » Markets live transcript 12 Feb 2009

Share Print

Markets live transcript 12 Feb 2009

Posted by Neil Hume on Feb 12 11:01.

Markets live chat transcript for the chat ending at 12:06 on 12 Feb 2009. Participants in this chat were: Neil Hume, FT (NH) Paul Murphy, FT (PM)

NH:

Morning all

PM:

hi there

PM:

We were just discussing all the FSA HBOS stuff yesterday

PM:

Financial system broken

PM:

Deepest recession in 70 years upon us

PM:

And what do the politicos/regulators do?

NH:

cover their backside

NH:

the buck was passed so many times yesterday, I lost where it was

PM:

NH:

from FSA, to KPMG, to HBOS, then back to the FSA and on to KPMG again

PM:

Extraordinary

PM:

Fitz — that message about exceptionally high demand….

PM:

it’s misleading — it usually means there are problems with the registration system

PM:

Our traffic is high tho

NH:

It is just me, or does Gordon Brown look like Richard Nixon?

NH:

just been watching our leader on the SC hearinh

PM:

People like to read about chaos

NH:

and I reckon there is a likeness

PM:

ah yeah

PM:

Squareness of the head?

NH:

and the jowls

NH:

right, lets get on to the market shall we

NH:

before anyone complains

11:07AM

NH:

just been looking at BT

NH:

shares biggest faller in the FTSE 100 at the moment

NH:

down 7.6p at 97.2p

NH:

sorry that should be down 7.9p at 97.3p

NH:

another set of disappointing results

NH:

and once again Global Services is to blame

PM:

This stock has gone nowhere in like 20 odd years

NH:

just looking at that. I think BT floated around 90p.

NH:

does anyone have a correct figure on that?

PM:

I dont know — even before my time — by there were three waves of floation i think

PM:

flotation even

PM:

Warburg took all the fees i think

NH:

amazingly poor performance over the years

NH:

anyway

NH:

today’s disappointment is GS again

NH:

and specifically cashflow

NH:

it will be significantly below last year

NH:

which is not good given their debt

NH:

now, analysts are on average taking

NH:

£300-400m off its free cash flow estimates for 2008/09 and £600-700m.
for 2009/10

PM:

Uh, that’s pretty chunky

NH:

analysts also reckon the dividend will be cut furhter

PM:

Any comment on these figs??

NH:

yep, plenty

PM:

Analyst wise

NH:

here’s Cazenove

NH:

BT has announced its Q3 figures this morning. A meeting will follow at 9am at BT Centre, webcast at www.btplc.com/results.
Both EBITDA and free cash flow in-line with pre-announced figures. In terms of divisional detail, Openreach strong, Retail robust and Wholesale improving. Global Services (“GS”) very weak as previously announced. P&L estimate changes likely to be limited, cash flow more of a concern.

NH:

Outlook for Q4: Continued strong performance expected from the group ex GS (+3%). However, cash flow from GS will be significantly below last year, which had been boosted by exceptional working capital inflows. Management states that it is trying to smooth GS’s cash flow profile. As a result, we need to take a further £300-400m off our free cash flow estimates for 2008/09 to c. £600-700m.
Outlook for 2009/10: Management expects group cash flow to be over £1bn, before any pension deficit payments. We were forecasting c. £1.2bn before c. £200m of increased pension payments. Our initial sense is that this remains achievable although much will depend on the level of exceptional cash costs next year.
Overall, core business continues to perform very well, although economic conditions deteriorating. GS remains the big concern. Following the recent trading statement and today’s cash flow commentary, we now estimate a GS cash outflow in the current year of c. £800m with £300m relating to a working capital reversal. Management believes GS is capable of being free cashflow positive and key will be confidence in this objective.

NH:

Whilst P&L valuation metrics remain very supportive, free cash flow is very weak this year and will be affected by pensions in later years. Ahead of the pensions funding review, it remains difficult to estimate BT’s dividend. We provisionally suggest a further cut from 10p to 7p, which would cost c. £500m per annum.
There is significant cost cutting opportunities for both the group and in particular GS. A sense from the analysts’ meeting that today is a final “clearing of the decks” will be required to support the share price.

NH:

Valuation metrics: Based on our new estimates to 2009/10, BT shares trade on 4.4x EBITDA (sector 4.6%), 5.6x PER (sector 8.3x) and a 6.9% div yield (sector 7.3%). These multiples reflect pension issues together with the recent performance of GS and concerns over BT’s exposure to a weak UK economy. Free cash flow less supportive; underlying free cash flow, before pension top-up payments, of £600m in 2008/09 would only give a free cash flow yield of 7.5% (sector 12.0%) in the current year. Whilst we expect this to double in 2009/10E, significant pension top-up payments will also be required going forward. We currently estimate increased pension payments of £200m being deficit payments of £300m less £100m lower ongoing costs following the recent agreement with the unions. However, much will depend on the outcome of the pensions funding review due in May. We estimate a funding deficit in excess of £5bn compared to BT’s market cap of £8bn

NH:

Oriel Securities

NH:

BT Q3 results highlight all is well in everything other than Global Services
Source: Company, Oriel Securities estimates. Note: consensus compiled before pre-close update (global services profit warning)
· The results don’t particularly add much to the big picture following last month’s Global Service profit warning
· The only key difference to our revised expectations concerns the £336m specific items on contract loses which have been included in GS EBITDA reporting, while we had stripped it out, otherwise the business are seemingly going to plan.
· Global Service order intake remained steady at GBP£1.8bn in the quarter and £8.3bn in the year, but valuing this business will not be possible until there is clarity on the contract accounting and likely ongoing profitability of this business.
· The other businesses have posted revenue and EBITDA growth of 5%, representing the best year on year performance for 5 years; somewhat supporting are arguments as to the resilience of the core business to the economic downturn – yet £198m of revenue benefit came from favourable currency movements and a further £153m from acquired growth.

NH:

Q4 will include more one-time charges on contracts and restructuring, which has still to be quantified and represents a material uncertainty to forecasts
· Free cash flow has been improved to -£32m due to working capital improvements and lower capex, but Q4 cash flow will be significantly weaker than historically as BT tries to re-phase the contracts more evenly through the year. BT is guiding FCF of over £1bn for next year, but BEFORE any pension deficit payment, our current forecast for 2010 is therefore not quite pessimistic enough, needing to account for more cash impact from the one time restructuring charges. Our bottom of consensus 6p dividend is therefore looking increasingly realistic
· Share price is unlikely to do much until there is greater clarity on the further one-time items and the cash implications of the pension review.

PM:

Apols for a bit of slowness this morning

PM:

network seems to be creaking a bit

NH:

and Morgan Stanley

PM:

maybe we have got particularly high traffic

NH:

Quick comment: BT this morning published its full
3Q09 results following its January profit warning.
Though the headline EBITDA numbers were already
known, the company gave more guidance on cashflow.
Due to a change in Global Services cashflow profile, the
company highlighted that FCF in 4Q will be significantly
lower than last year. As a result, we think consensus
forecasts may settle around £600-700m (7.7-9p a share)
of cashflow for this year (current MSe £1.0bn), with
F2010e cashflow (pre-pension top-ups) guided to “over
£1bn” (MSe £1.18bn).

NH:

Dividend impact: Unless the company is prepared to
pay an uncovered dividend for F2009e (possible in our
view, given the ‘one-off’ nature of the lower cashflow for
this year), then our previously highlighted range of 6-10p
a share for the F2009e dividend looks optimistic. For
next year, assuming that the range for cashflow
(pre-pension top-ups) is £1-1.2bn (note guidance of
“over £1bn”) and the range of gross pension top-up
payments is £280-500m, the range for FCFE
post-pension top-ups would be 8.2-12.8p a share.

NH:

Valuation commentary: A lot of the bad news is
already priced in to BT shares at current levels, in our
view: marking to market the ‘core’ would imply a
negative value range for Global Services and pensions
of £5-15bn, in our view; and if the company were able to
eradicate losses from Global Services, then the
business could be trading on a high-teens FCF yield. But
our conviction level on this bull case remains low, given
that 1) pension top-ups need to be clarified, with a stock
market bottom finding a floor for the deficit; and (2) a
clear route to Global Services profitability/cash neutrality
needs to be laid out by management. Until then, the
shares will remain a range-bound trade around the
dividend, in our view.

NH:

and finally Merrill

NH:

BT’s Q3 results highlighted by further FCF cuts
After its pre-announcement three weeks ago, BT has again adjusted down FCF
expectations for this year, reflecting lower working capital inflows expected in Q4.
This should help to smooth the Group’s quarterly FCF profile somewhat going
forward. Revenues were better than expected but we think the focus will remain
on FCF with the disappointment this year, and the new “over £1bn” target for next
year.

NH:

Cutting EPS by 10%, FCF by 35% this year
Our FCF forecast for this year, taking into account lower expected working capital
inflows in Q4, is now under £700mn, a cut of 35%. For next year, we have cut our
FCF estimate by 7% to around £1bn (including a £200mn pension top-up). Our
EBITDA estimates are down 0.5% this year and 2% next year.

NH:

Cutting dividend to 7p, a yield of around 7%
We now expect a 7p dividend, a cut from our previous 10p estimate. This would
put BT on just less than a 7% yield, and would be a 60% payout of BT’s £1bn,
pre-pension top-up, FCF target for next year.
Our price objective is 115p
Our price objective remains 115p. The FCF drain of Global Services and the
pension uncertainty continue to overshadow BT’s steady core business.

PM:

thanks for all that Neil

11:17AM

PM:

Sime to take the wider temperature

PM:

How’s the Footsie doing??

NH:

not so good

NH:

down nearly 60 points at 4,176

PM:

oh dear

NH:

BT is obviously weighing

NH:

as are the property stocks

NH:

and also Diageo

NH:

which looks to have

PM:

Ah Diageo

NH:

cut its profit target according to Reuters

NH:

is that profit warning?

Diageo (DGE:LSE): Last: 852.50, down 55 (-6.06%), High: 870.00, Low: 845.50, Volume: 9.41m

PM:

Certainly is

NH:

what are they saying?

NH:

certainly had a bad reaction

PM:

First half figs okay — but it’s cut its profit target for th eyear

NH:

slow sales in Europen by the looks of things

NH:

surprising

NH:

I would have thought people would have been drinking to forget

NH:

drowning their sorrows with a bottle Smirnoff

PM:

So, profits warning from Diageo — shares down 5% on that

PM:

What are the analysts saying on this??

NH:

here’s Citi

NH:

FY09 organic EBIT guidance lowered from +7-9% to +4-6% – This may not
come as a great surprise given weekend press speculation (The Times,
February 9, 2009) but what may do so is the speed of deceleration in top line
growth, from c.6% in Q108 to about flat in Q208. Diageo has responded with a
£100m cost restructuring programme and is halting its share buyback. The
impact on FY09 consensus EPS will likely be largely offset by the net effect of a
strongly positive FX benefit (£210m or +9% on EBIT); a 1% lower tax rate and
higher net financial charges.

NH:

Inevitable mixed bag by region – In North America (1H09 organic net sales
+4%) spirits sales have been robust (+8%) but beer, wine and RTD sales all
declined. Europe top line (organic -3%) was impacted by an 18% sales decline
in Spain, while Asia (organic +2%) was restrained by lower RTD sales in
Australia, excluding which it grew +8%, helped by distribution changes in
Korea. International was still strong (organic sales +11% including +20% in
Africa) though difficult conditions outside the big Lat Am markets were noted.

NH:

Working through the downturn – The fact that Diageo has been impacted by
global macro economic conditions of itself is not surprising but perhaps the
speed is. Given this, organic EBIT for FY09 could well be delivered towards the
bottom end of guidance, while in the US, by far its biggest market and resilient
thus far, rising unemployment continues to present challenges, as do the risks
of both Federal and State excise taxes, suggesting limited share price upside.

NH:

here’s Merrill

NH:

Diageo reported 1H09 organic sales growth of 3% and organic EBIT growth of
6%, below market expectations of 5% organic and 7% orgaic sales and EBIT
growth. The company also lowered its organic EBIT guidance from of 8% to 5%.
The company highlighted that the impact of the deteriorating economic
environment was more pronounced in Nov and Dec. We believe this will come as
a disappointment. The downgrade in the organic EBIT guidance comes on top of
the downgrade last, and even more disappointing is the fact that the company
remained fairly confident in their communications to the market as late as Dec
last year.

NH:

We don’t think the market will not like the fact
- that they cut A&P by 1% with net sales up 3%
- volumes in Europe declined by 5% and in the International division declined by
2%, and International by 8%.
On a reported basis however the reported EBIT was in-line with expectation, and
the EPS was boosted by a lower tax rate. On an organic basis we expect the
market to cut numbers by at least 5% with some of this offset by positive FX
impact.
We retain our Neutral opinion

NH:

and Cazenove

NH:

Diageo – [DGE.L, DGE LN] 902p Stock – Outperform, Sector – Neutral
Summary & new forecasts
Diageo has seen a significant slowdown in H1, particularly at the top line level, and its guidance for the full year has become more cautious as a result. We expect the shares to open lower. However, EPS for FY2009 will be supported by a lower tax rate and (more importantly) earnings growth in FY2010 will be supported by a larger than expected currency benefit (£200m at the EBIT level vs our above consensus expectation of £166m) and a cost reduction programme targetting £100m of savings.

NH:

Valuation & recommendation
Diageo trades on 12.1x CY2009E PE, a 5% premium to the sector on 11.5x. However, this gap closes in CY2010E with Diageo’s multiple falling to 10.6x, with its earnings boosted by the fall in sterling. Diageo is our top pick within the beverages sector. In the current environment we value the resilience to recession offered by its bias towards developed markets, its ability to moderate investment in the emerging markets, and its strong balance sheet. Moreover, we believe that the beneficial effect of sterling’s weakness is being underestimated by the market.
Organic EBIT growth of 4-6%, below previous guidance of 7-9%. We provisionally cut our FY2009 organic EBIT growth forecast from 5.8% to 5%. DGE now sees a £210m FOREX benefit to EBIT in FY2009E. This compares with the guidance of a £60m benefit given in last August. It is slightly below our expectations of a £242m benefit (marked to market). To our surprise, Diageo has offered currency guidance for FY2010, where it expects a £200m benefit at the EBIT level. This is above our estimate of a £166m benefit (marked to market) and more significantly above apparent market expectations. DGE has suspended its share buy back programme (previously planned to be £750m in FY2009).

NH:

Flash – Budget scheduled for April 22

PM:

Hmm — suggesting the company really failed to communicate this warning in advance in any way

NH:

looks that way

11:23AM

PM:

Lots of other stuff to get through this morning

PM:

results, rights issues and then we have Rio’s $19bn deal with the Chinese

PM:

what’s been the reaction?

NH:

pretty muted

NH:

shares are doing nothing, although they have had a good run

NH:

down 9p at £19.60

PM:

hmm

NH:

they were £14 at the start of the month

NH:

analysts are pretty cool on the deal

NH:

Rio is selling biggest than expected stakes in many of its tier one assets

NH:

for prices that just aren’t that spectacular

NH:

on top of that Chinese are buying $7bn of convertible bonds

NH:

which have a pretty high strike price

NH:

but also a high coupon

NH:

but existing shareholders are not getting the opportunity to buy them

NH:

even Barclays caved in on that

PM:

hmmmm

PM:

So what do you think shareholders will do?

NH:

well, they are making a lot of noise

NH:

But whether that translates into action I am not so sure

NH:

Rio are selling assets at the bottom of the market to pay off debt

NH:

and they have a lot of debt – $39bn

NH:

so there is value leakage here

NH:

assets they own are being transferred to the Chinese for a price

NH:

which means when the upturn comes – as it will one day – they won’t get to share the benefit

PM:

so when’s the shareholder vote

NH:

well it is quite a way away

NH:

May

NH:

Could even be June

NH:

and a lot can happen between then and now

NH:

commodity prices could rise sharply

NH:

I guess they will vote down the deal

NH:

if they collapse it might look more attractive

NH:

this thing is in the balance I would say

PM:

analyst comment???

NH:

I have a pretty critical note from Cazenove

NH:

Fistynutes – there is another way. Shareholders have said they will back a righhts issue

NH:

the company is not going to end up in the hands of its debt holders

NH:

if that were the case the stock would have flown this morning

NH:

back to the Caz note

NH:

well worth reading

NH:

they are one of the better mining teams in the City

NH:

Our initial reaction is, to say mildly and with emotions in check, disappointment on both levels of economic interests being sold and the value attached. Chinalco have gone straight for the ultra tier one assets within the stable – Weipa, Hamersley
Iron and Escondida along with the other tier one and important businesses of Kennecott Holdings (Bingham Canyon), Yarwun, Grasberg and the La Granja copper project. In addition they have bought stakes in Boyne and Gladstone Power
Station. No coal though and sadly no downstream aluminium packaging assets

NH:

The stakes range from 15% to 50% (see table below) versus market speculation of 10-20%. The convertible does not look particularly attractive for Rio Tinto either
(the coupons are 9 and 9.5% respectively) and with two Chinalco nominated directors on the board of the company comes conflicting interest from the world’s hungriest consumer of commodities. Furthermore the two companies have entered into
various strategic alliances that give Chinalco even greater levels of control in the underlying businesses. It feels as if these transactions were struck under the duress of the BHP Billiton offer post the Lehman failure and complete credit seizure in
Q3 last year. Conditions have changed and the market’s appetite for a rights issue with it.

NH:

Not necessarily a done deal
We are unlikely to be the only ones with this view in the market. The transaction (i.e. both deals) is conditional on amongst others shareholder approval (a majority i.e. 50+1). There is a $195m break fee, however this is not payable if shareholders
vote against. The timetable is quite lengthy with the EGM likely to be held around May/June. The likelihood of the deal being voted down will clearly increase on any further commodity price improvement. Rio Tinto are restricted from soliciting a
competing proposal but can accept a superior proposal and we suspect the long interval before EGM, rising commodity prices in the interim and the circular announcement of prices paid for the individual assets is likely to encourage this.

NH:

The effect on our near term EPS forecasts is a 20% and 16% dilution for 2009 and 2010 respectively and the company would have no near term maturity issues we believe. So the stock remains on relatively low PER multiples of 8.9x and 7.1x
marked to market PER for FY09 and FY10 versus our estimates assuming a straight $10bn rights issue that would address the 2009 debt commitment and leave the stock trading on PER multiples of 7.4x and 4.6x (spot). The quality differential in
the earnings, and changes to the economic value attributable to shareholders, arising from the Transaction versus a rights issue suggests to us that the board’s unanimity may not be shared by the market. The latter may, for instance, have
preferred Rio to have cut its dividend for two years rather than sold nearly half its stake in Escondida.

PM:

Hmm

NH:

Quality of Assets. Even those unfamiliar with the mining industry will be aware that Hamersley is the flagship asset within the Rio portfolio. We would also ascribe Weipa and Escondida with ultra tier one categorisation. This is a measure
of their cost of extraction, grade and homogeneity of the ore, and size and longevity. Bingham Canyon is, in our view, near this status although the pit has become deep and the future may rest in going underground. Yarwun is the
company’s most recently built alumina refinery and sources bauxite feed from Weipa whilst selling, in turn, alumina to Boyne. Grasberg still remains in the top five copper mines in the world by production although Rio’s share of earnings is
relatively small. La Granja has the potential to become a 300500kt copper mine.

NH:

We await value per stake from Rio Tinto but it feels to us that there will be other companies out there who can exact far
higher synergies from these assets and will certainly be more familiar with them. We have already referred to valuation
paid by Vale for Rio’s lower quality Brazilian assets.

NH:

While we recongnise that the price paid in terms of earnings multiples looks relatively attractive against current trading metrics, we find it difficult to reconcile the rationale for this deal with Rio Tinto’s history of long term value creation for its shareholders. We believe the market reaction will hinge on three inter=related
decisions. Firstly, do shareholders believe that strengthening the company’s ties to one of its major customers is positive or negative? Secondly, does the magnitude of asset sales appropriately reflect the benefit of the tieup?
Finally, are shareholders comfortable that the proposed deal is a better alternative than raising money through more
traditional means?

PM:

interesting stuff

NH:

yep

NH:

here’s some more

NH:

these are slightly more positive

NH:

UBS

NH:

and MF Global

NH:

IMPACT: Deal with Chinalco is accretive to value and de risks the company…

NH:

this is UBS

NH:

On an intitial view, RIO receives US$12.34bn from asset sales, while our estimated NPV for what was sold is roughly US$10.8bn. This prima facie represents a 14% premium although we need to analysis the sales in greater detail. Potentially the market is likely to view the removal of debt overhang as favourable, however may be dissapointed by the modest premium to our valuations, given previous asset sales have been achieved at larger premiums. Optically, the price attributed to Hamersley of US$5.15bn, implies a value of US$34.3bn for 100% vs UBSe of US$37.5bn.

NH:

However the devil is in the detail because the investment does not include stakes in any of Rio Tinto iron ore’s Pilbara joint ventures (such as Robe Robe River, Hope Downs, BaoHI, Channar and Rhodes Ridge). So it may not be as low as it appears on first glance against our estimate. We also note that the attributed price of US$3.4bn for ~15% of Escondida is well ahead of UBSe for US$1,928m (for 15%). With the myriad of Asset sales, it would be possible for RIO to at the margin transfer value attributed from the package to this notional price in order to dissuade BHP from taking up its rights to counterbid or to receive a fuller price.

NH:

and MF

NH:

Although shareholders and the Australian and US governments will still have to agree to this deal with Chinalco, we think that this deal is actually quite good for the company and all its shareholders. The deal has been struck at a premium to market values for both the shares and the implied valuation for the minorities, while still leaving the door open for a third party to approach
the Group.

The uncertainty surrounding the approval by shareholders and the government will
hold the stock back, but once this comes through, then the stock should regain a significant part of its underperformance. In terms of read across this deal is a major vote of confidence by the Chinese government in the sector and its need for minerals. So the sector should bounce on the back of this.

NH:

That said, for BHP Billiton this deal could possibly create a strategic challenge, with
which they have not reckoned before approaching Rio Tinto. Finally, the Rio Tinto results are at the higher end of expectations and pretty close to our top of the range estimates. So in short, we do expect a bit of travel and arrive performance here today at Rio Tinto, but would not expect too much of a decline either.

We have a Neutral on the shares with a Target Price of 2,000p. We saw
significant value in the shares before, but were put off by the uncertainty relating to the debt. With this issue being addressed, then the full value of the stock could crystallise as the deal is being approved. Both our Rating and Target Price are under review.

NH:

The valuation is actually not that bad, while the minority stakes do not preclude future
corporate activity. The convertible debt has been sold at $45 and US$60, which implies valuations of 15x and 20x 09E respectively. The minority stakes have been sold at an equivalent 17% of the EV, while the attached EBITDA only amounts to 10% of the Group. To put it differently, Chinalco is paying
a 5.6x EV/EBITDA for the various minority stakes compared with a valuation before the deal of around 3.3x 09E EV/EBITDA. Post the deal the valuation still only sits at around 3.5x 09E EV/EBITDA, even when assuming the higher number of shares and minority impact on EV. In as far as we understand there are no pre-emption rights on any of the assets sold, which should leave the door open to future bidders;

• A lot of advantages for Rio Tinto. The deal will reduce debt by US$19.5bn improving the net debt
EBITDA ratio from around 2x 09E before the deal to around 0.7x post the deal. In addition, it gives the Group a very strong foothold in China, one of its major markets.

NH:

The Group maintains operational
control, while not giving away too much of its important assets either. In the case of Hammersley for example the Group only sells 15%. Also, Chinalco only gets two new board seats, adding to the existing 15 seats. Finally, it also leaves the Group in a strong position to continue its development strategy both organically as well as in terms of M&A;

• A major vote of confidence by the Chinese for the sector. Investing almost US$20bn into the mining sector indicates how much more the Chinese expect with regard to its needs for basic materials. They are still only at the early stages of economic development, which is generally quite construction and natural resources biased. Being short of minerals, they clearly see their potential
dependence on natural resources rich countries. This deal highlights the fact that China and India, in our view, will continue to see their demand for minerals increase, as they focus on growing their domestic economies. For anyone who has doubted the structural shifts in economic power in the world, this is a stark reminder of what we should expect in the future;

NH:

• A strategic challenge for BHP Billiton? Having moved on Rio Tinto in 2007 has opened a Pandora’s box for the world’s leading Miner. The question is whether they can now return to bid for Rio Tinto in time? We expect the deal with Chinalco to close in the third quarter of this year, which might just leave it enough time to reconsider an offer. The other question is whether BHP Billiton can
scupper the deal otherwise or have the capacity to make a more attractive offer. If not, then they might consider other opportunities in the sector such as AngloAmerican (BUY, TP 2,600p), which would offer them an improved position in iron ore, copper and a new metal with platinum;

• Finally, the Rio Tinto results were quite a bit stronger than the market expected. At the underlying earnings level the Group beat consensus by 6%, while at the EBITDA level US$22.3bn) it was some 7% better. Excluding exceptional items at the EBITDA level the Group even beat our very top of the range estimate of US$22.2bn;

PM: