Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — H1 FY2015 Earnings Presentation
36 slides from Bhp's earnings presentation, Feb 24, 2015
Slide 1: Interim Results Presentation cover letter
For personal use only BHP Billiton Limited BHP Billiton Plc 171 Collins Street Neathouse Place Melbourne Victoria 3000 Australia London SW1V 1LH UK GPO BOX 86 Tel +44 20 7802 4000 Melbourne Victoria 3001 Australia Fax + 44 20 7802 4111 Tel +61 1300 55 47 57 Fax +61 3 9609 3015 bhpbilliton.com bhpbil
Slide 2: Interim results 2015 financial year
Port Hedland For personal use only Interim results 2015 financial year Andrew Mackenzie Chief Executive Officer Peter Beaven Chief Financial Officer 24 February 2015
Slide 3: Disclaimer
Disclaimer For personal use only Forward-looking statements This release contains forward-looking statements, including statements regarding: trends in commodity prices and currency exchange rates; demand for commodities; plans, strategies and objectives of management; closure or divestment of certa
Slide 4: Interim results 15 financial year
Escondida For personal use only Escondida Interim results 2015 financial year Andrew Mackenzie Chief Executive Officer 24 February 2015
Slide 5: Delivering on our commitments
Delivering on our commitments For personal use only • We continue to realise substantial productivity gains • Our plans are flexible and we have reduced investment while preserving long-term value • We have increased free cash flow to US$4.1 billion despite weaker prices • We have strengthened our b
Slide 6: Safety is paramount
Safety is paramount For personal use only Total Recordable Injury Frequency (TRIF) (number of recordable injuries per million hours worked) 10 8 down 54% 6 4 2 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 H1 FY15 Interim results, 24 February 2015 Slide 5
Slide 7: Robust financial results
Robust financial results For personal use only • Underlying EBITDA of US$14.5 billion, down 12% • Underlying attributable profit of US$5.4 billion, down 31% • Net operating cash flow of US$10.4 billion, down 12% • Capital and exploration expenditure1 of US$6.4 billion, down 23% • Free cash flow of U
Slide 8: Interim results 2015 financial year
Angostura For personal use only Interim results 2015 financial year Peter Beaven Chief Financial Officer 24 February 2015
Slide 9: Focusing on the factors we control
Focusing on the factors we control For personal use only Underlying EBIT variance (US$ billion) 15.0 Uncontrollable (-US$5.9 billion) Controllable (+US$2.7 billion) 12.4 1.8 0.2 10.0 9.2 0.5 (0.9) (0.3) 1.4 0.6 6.5 (0.4) (6.1) 5.0 0.0 Growth volumes energy H1 FY14 H1 FY15 Exchange Price¹ Sub-total c
Slide 10: Petroleum & Potash: continuing to increase operating productivity
Petroleum & Potash: continuing to increase operating productivity For personal use only • Production increased by 9% to a record 131 MMboe supported by a 71% increase in Onshore US liquids volumes, although this was offset by lower average realised petroleum prices • Significant improvements in Onsh
Slide 11: Copper: improving cost efficiency mitigates price pressure
Copper: improving cost efficiency mitigates price pressure For personal use only • Weaker base metal prices, including an 11% decline in the average realised price of copper, significantly affected profitability • A 13% reduction in Escondida unit cash costs1 to US$1.06 per pound was achieved in H1
Slide 12: Iron Ore: unit cash costs approaching US$20 per tonne
Iron Ore: unit cash costs approaching US$20 per tonne For personal use only • WAIO production increased by 15% to a record 124 Mt1 as the ramp-up of Jimblebar continued and we improved the availability, utilisation and rate of our integrated supply chain • The average realised price of iron ore decr
Slide 13: Coal: systematically reducing our costs
Coal: systematically reducing our costs For personal use only • Metallurgical coal production increased by 21% to 26 Mt as Queensland Coal and Illawarra Coal both achieved record production • Average realised prices declined by approximately 20% for our coal products significantly impacting profitab
Slide 14: Aluminium, Manganese & Nickel: higher prices boosting profitability
Aluminium, Manganese & Nickel: higher prices boosting profitability For personal use only • Record manganese ore and alumina production was underpinned by strong performances at both Hotazel and the Alumar refinery • Higher average realised prices for alumina, aluminium and nickel delivered a signif
Slide 15: Progress against US$4.0 billion productivity target
We are making great progress against our US$4.0 billion productivity target For personal use only Productivity-led volume and cost efficiencies1 (US$ billion) 4.0+ 4.0 2.0 3.0+ 3.0 2.0 1.0 1.0 0.0 Volumes Cash costs FY15e FY17 target 1. Represents planned annualised volume and cash cost productivity
Slide 16: Other items affecting profitability
Other items affecting profitability For personal use only Other items (US$ million) Underlying EBIT Underlying attributable profit Exceptional items 500 325 174 0 (290) (290) (361) (500) (809) (1,000) FX impact on Impairments FX impact on net FX impact on Impairment of Repeal of MRRT balance sheet f
Slide 17: Maximising free cash flow by improving productivity and reducing investment
Maximising our free cash flow by improving productivity and reducing investment For personal use only • We started preparing for a lower price Sources and uses of funds environment many years ago (US$ billion) 16 – approaching US$10 billion1 of annualised productivity-led gains – capital and explora
Slide 18: Our balance sheet is strong
Our balance sheet is strong For personal use only • The Group remains committed to a strong Our balance sheet continues to strengthen balance sheet and a solid A credit rating (net debt, US$ billion) (gearing, %) 30 30 – in January 2015, Standard & Poor’s reaffirmed our A+ credit rating 25 25 • Net
Slide 19: Interim results 2015 financial year
Escondida For personal use only Daunia Interim results 2015 financial year Andrew Mackenzie Chief Executive Officer 24 February 2015
Slide 20: Emerging economies will drive long-term commodities demand growth
Emerging economies will drive long-term commodities demand growth For personal use only Short-term drivers Emerging economies will underpin global growth (emerging economies share, %) • Global growth is expected to increase in CY15 100 90 – consumption-led recovery in the US – monetary easing in a n
Slide 21: Iron ore: the cost curve will continue to flatten
Iron ore: the cost curve will continue to flatten, leading to more stable pricing For personal use only Short-term drivers Higher-cost Chinese supply is being curtailed (%) (US$/t) • Iron ore prices are likely to remain subdued 100 200 over the short to medium term as low-cost supply continues to ri
Slide 22: Coal: a scarcity of high-quality resources supports longer-term demand
Coal: a scarcity of high-quality resources supports longer-term demand For personal use only Short-term drivers Seaborne metallurgical coal exports (Mt) • Australian supplier costs have benefited from 200 currency depreciation and lower freight rates • Metallurgical coal pricing is expected to 150 r
Slide 23: Copper: positive fundamentals despite short-term price weakness
Copper: positive fundamentals despite short-term price weakness For personal use only Short-term drivers Chinese grid investment is increasing (RMB billion) • Prices trended lower as strong supply growth 500 was compounded by concerns over China’s short-term demand 450 • Chinese power infrastructure
Slide 24: Petroleum: oversupply will clear, requiring higher prices
Petroleum: oversupply will clear, requiring higher prices to meet growing demand For personal use only Short-term drivers Low-cost liquids supply is declining rapidly (MMboe/d) • Crude oil prices declined due to growing US 110 supply, a lower demand outlook and OPEC’s High-cost supply decision to ma
Slide 25: Unrivalled flexibility to adapt to market volatility
Unrivalled flexibility to adapt to market volatility For personal use only • Our proven strategy has delivered superior returns throughout the cycle Maximise operating Maintain capital cash flow flexibility • Our capital allocation framework remains Approaching ~US$10 billion 40% decline in capital
Slide 26: Continuing strong operational performance
Continuing strong operational performance For personal use only • Group production1 increased by 9% in Production growth from our key commodities H1 FY15 or 12% from the core portfolio (production volumes, % change, H1 FY15 versus H1 FY14) – petroleum liquids production increased by 24% to 62 MMboe
Slide 27: We are reducing costs faster than anticipated
We are reducing costs faster than anticipated For personal use only • We are leading the industry in the pursuit Western Australia Iron Ore Queensland Coal (unit cash costs, US$/t1) (unit cash costs, US$/t2) of sustainable productivity gains 30 105 – unit cost improvements realised at our major basi
Slide 28: We have substantial investment flexibility
We have substantial investment flexibility For personal use only • We continue to selectively invest in our Lowering our rate of investment high-returning growth options (capital and exploration expenditure2, US$ billion) 25 – average rate of return1 remains greater than 20% 20 • Our level of invest
Slide 29: Our progressive base dividend is fundamental
Our progressive base dividend is fundamental For personal use only • Our strong balance sheet and solid A We aim to maintain or grow the base dividend credit rating are fundamental enablers of every period our strategy (dividends determined, US cents per share) 75 • We have increased our interim div
Slide 30: Our proposed demerger is progressing to plan
Our proposed demerger is progressing to plan For personal use only • South32 assets are performing well with record A strong performance from the South32 assets manganese ore and alumina production and (Underlying EBITDA, % change, H1 FY15 versus H1 FY14) strong underlying financial performance Alum
Slide 31: Our uniquely simple and high-quality portfolio
Our uniquely simple and high-quality portfolio For personal use only • A simplified portfolio supports our aim to A simplified portfolio1 continue to deliver superior returns throughout (copper equivalent production per employee) BHP Billiton excluding South32 the cycle Largest • With a simpler port
Slide 32: Delivering on our commitments
Delivering on our commitments For personal use only • We continue to realise substantial productivity gains • Our plans are flexible and we have reduced investment while preserving long-term value • We have increased free cash flow to US$4.1 billion despite weaker prices • We have strengthened our b
Slide 33: BHP Billiton: resourcing the future
cdl bhpbilliton resourcing the future
Slide 34: Appendix
For personal use only Appendix
Slide 35: Key net profit sensitivities
Key net profit sensitivities For personal use only Approximate impact1 on FY15 net profit after tax of changes of US$ million US$1/t on iron ore price 140 US$1/bbl on oil price2 50 US¢1/lb on copper price 30 US$1/t on metallurgical coal price 30 US¢10/MMbtu on US gas price 25 US¢1/lb on aluminium pr
Slide 36: BHP Billiton: resourcing the future
cdl bhpbilliton resourcing the future