Bhp Group Ltd · ASX:BHP
Bhp — FY2023 Earnings Presentation
38 slides from Bhp's earnings presentation, Aug 22, 2023
Slide 1: Disciplined execution of our strategy
Disciplined execution of our strategy Full year ended 30 June 2023 Western Australia Iron Ore
Slide 2: Disclaimer
Disclaimer The information in this presentation is current as at 22 August 2023. It is in summary form and is not necessarily complete. It should be read together with the BHP Results for the full year ended 30 June 2023. Forward-looking statements This presentation contains forward-looking statemen
Slide 3: Performance summary
Performance summary Full year ended 30 June 2023 Mike Henry Chief Executive Officer Olympic Dam
Slide 4: Disciplined execution of our strategy creates value
Disciplined execution of our strategy creates value Delivered robust results in the 2023 financial year Tragically, two fatalities in H2 Solid operating performance, with records at WAIO, Olympic Dam and Spence Strong financial results and returns OZ Minerals acquisition completed, integration under
Slide 5: FY23 social value highlights
FY23 social value highlights Delivering on our framework with tangible results Our social value framework Decarbonisation Healthy Indigenous Safe, inclusive Thriving, Responsible environment partnerships and future ready empowered supply chains workforce communities Operational GHG Natural Capital I
Slide 6: Financial results
Financial results Full year ended 30 June 2023 David Lamont Chief Financial Officer Escondida
Slide 7: Financial performance
Financial performance Reliable operating performance delivers strong results Summary financials Income statement (US$ bn, Underlying) • Underlying attributable profit of US$13.4 bn at 28.8% ROCE 60 • Underlying EBITDA of US$28.0 bn 53.8 Taxes and royalties: – Underlying EBITDA margin of 54% 50 US$10
Slide 8: Group earnings waterfall
Group earnings waterfall Lower prices and external inflation the biggest drivers Underlying earnings variance and drivers (US$ bn) Year on year comparison Current year reconciliation 45 40.6 External US$(10.3) bn Controllable US$(1.0) bn FY23 income statement impacts 40 39.2 35 0.7 1.5 30 28.9 28.0
Slide 9: Consistent performance
Consistent performance Continue to deliver strong margins and a consistently high baseline of cash flow Margins ahead of peers through commodity cycles16,17 Consistently delivered >US$15 bn in net operating cash flow17(i) (Underlying EBITDA margin, %) (Bloomberg commodity index, rebased) (US$ bn) 1…
Slide 10: Segment performance
Segment performance Iron ore Nickel Production: 257 Mt Production: 80 kt Average realised price: US$92.54/wmt Average realised price: US$24,021/t EBITDA margin: 67% EBITDA margin: 8% WAIO unit cost18: US$17.79/t • Impacted by inventory draw downs, cost inflation and lower realised WAIO C1 un
Slide 11: Capital spend increasing to deliver growth
Capital spend increasing to deliver growth Medium term capital ~US$11 bn on average with flexibility to adjust spend for value Increasing spend on future-facing commodities to ~70%21 (US$ bn, nominal) (capital in future-facing commodities, %) 12.5 80 Major capital in future-facing commodities includ
Slide 12: Business update
Business update Full year ended 30 June 2023 Mike Henry Chief Executive Officer Jansen
Slide 13: Portfolio positively leveraged to megatrends
Portfolio positively leveraged to megatrends Built to compete in a complex but opportunity-rich environment Portfolio Copper Nickel Iron Ore Metallurgical Coal Potash Largest mineral Second largest Lowest cost iron ore Leading met coal Large-scale resource supports resources22 sulphide resources23 p
Slide 14: Growing value over multiple time horizons
Growing value over multiple time horizons A growing production base with multiple studies underway providing significant longer term optionality A strong pipeline of growth under study and in execution … … with additional opportunities … Illustrative timeline FY24 FY25 FY26 FY27 FY28 FY29 FY30+ 26 J
Slide 15: Opportunities from the OZ Minerals acquisition
Opportunities from the OZ Minerals acquisition Developing a new copper province with significant synergy potential Copper province in South Australia • Exposure to future-facing commodities in well-understood jurisdictions OZ Minerals • Near term synergies delivered, additional opportunities in the
Slide 16: Near term opportunities to deliver value
Near term opportunities to deliver value Early integration and productivity opportunities: >US$20 m per annum synergies already achieved Synergies of >US$50 m per annum from the OZ Minerals acquisition expected to be delivered by the end of FY24 Operations • Optimisation of mine plans and growth pro
Slide 17: Unlocking value from developing a new copper province
Unlocking value from developing a new copper province Regional processing model expected to provide scale and growth; assessing potential pathway to >500 ktpa Assessing potential pathway to >500 ktpa29 … … to release significant value (Copper South Australia production, ktpa) • Ramp up of Carrapatee
Slide 18: Defining the path for growth in the Americas
Defining the path for growth in the Americas Studies progressing on options to grow potash volumes and offset longer term grade decline in copper Jansen Stage 2 could double potash volumes Unlocking resource and latent capacity in Chilean copper • Stage 2 on accelerated timeline to maximise optional
Slide 19: Investment proposition
Investment proposition Attractive returns underpinned by operational excellence, capital allocation discipline and social value commitment Operational Disciplined Value and returns excellence capital allocation World class Differentiated Agile decision Strong Capital A framework Commitment to Increa
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Slide 21: Footnotes
Footnotes 1. Slide 5: For our baseline year of FY20, our operational GHG emissions were 14.5 Mt CO2-e, adjusted for discontinued operations (Onshore US assets and Petroleum) and the divestment of BMC, and for methodological changes (use of Intergovernmental Panel on Climate Change Assessment Report
Slide 22: Appendix
BHP Appendix
Slide 23: Safety and social value indicators
Safety and social value indicators We continue to emphasise the safety culture that must be present every day to eliminate fatalities and serious injuries at BHP Key safety indicators1 FY23 FY22 Target/Goal Fatalities 2 0 Zero work-related fatalities High Potential Injury (HPI) frequency3 0.18 0.14
Slide 24: A proactive approach to decarbonisation
A proactive approach to decarbonisation Integrating decarbonisation into our operational and capital plans, and collaborating to achieve our climate targets and goals Projected and potential operational GHG emissions abatement A partnership approach to Scope 3 pathway to CY501 Steelmaking Shipping (
Slide 25: Samarco and Renova Foundation
Samarco and Renova Foundation Samarco plans restart of second concentrator by CY25. R$30.7 bn spent on reparation and compensation programs Renova Resettlement Samarco • Claims processed for ~80%1 of people on Renova’s • ~75% of resettlement cases3 completed across the • Approved restart of the seco
Slide 26: Oak Dam exploration project update
Oak Dam exploration project update1 We have commenced the next phase of drilling as we work towards defining a first Mineral Resource2 Oak Dam Exploration Target FY233 Oak Dam project schematic cross section (Oak Dam cross section showing the target is open at depth, south and west of the Hardy Hill
Slide 27: Competent Person Statement – Oak Dam
Competent Person Statement – Oak Dam Competent Persons Statement The information in this presentation that relates to Exploration Targets is based on information compiled by Dr. Kathy Ehrig, a Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Fellow of the
Slide 28: Chilean copper leaching overview
Chilean copper leaching overview Studies progressing on options to partially offset longer term grade decline in copper Potential Significant resource potential Cycle Capital production BHP Leaching technologies time Cost impact • Escondida ~26 Bt at 0.52% grade • Spence ~2.5 Bt at 0.43% grade BioLe
Slide 29: Competent Person Statement – Copper Mineral Resources
Competent Person Statement – Copper Mineral Resources Copper Mineral Resources Competent Persons Statement The information in next slide relates to Copper Mineral Resources as at 30 June 2023. Mineral Resources are inclusive of Ore Reserves and is based on information compiled by Marcelo Cortes as C
Slide 30: Compiled Copper Mineral Resources as at 30 June 2023
Competent Person Statement – Copper Mineral Resources Compiled Copper Mineral Resources as at 30 June 2023 Measured Resources Indicated Resources Inferred Resources Total Resources Deposit Ore type Contained metal BHP interest (%) Tonnes (Mt) % Cu Tonnes (Mt) % Cu Tonnes (Mt) % Cu Tonnes (Mt) % Cu (
Slide 31: Competent Person Statement – Nickel Mineral Resources
Competent Person Statement – Nickel Mineral Resources Nickel West Mineral Resources Competent Person Statement The information in this slide relates to Nickel West Mineral Resources as at 30 June 2023. Mineral Resources are inclusive of Ore Reserves and is based on information compiled by Richard Fi
Slide 32: Continued capital allocation discipline
Continued capital allocation discipline Strong competition for capital as we focus on creating value FY23 Operating Capital productivity productivity Net operating cash flow US$18.7bn Maintenance and decarbonisation capital US$3.0 bn Strong balance sheet Minimum 50% payout ratio dividend US$9.1 bn
Slide 33: Return on Capital Employed
Return on Capital Employed ROCE of 28.8% for FY23 ROCE ROCE by asset (%) (%) 55 60 50 50 45 40 40 35 Antamina1 30 BMA Escondida 30 WAIO 25 20 20 10 15 Pampa Copper Norte South Australia 10 0 5 Nickel (10) West 0 FY18 FY19 FY20 FY21 FY22 FY23 0 10 20 30 40 50 Average capital employed Half year result
Slide 34: Balance sheet
Balance sheet Net debt of US$11.2 bn and gearing of 18.7% Movements in net debt Debt maturity profile2 (US$ bn) (US$ bn) 12 0.5 11.2 8 1.1 0.5 1.2 13.3 8 6 4 4 0.3 (5.6) 0 2 (4) 0 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 - Post FY40 FY41 US$ Euro Sterling Bank (8) Bonds3 Bonds3 Bonds3 Debt Subsidiari
Slide 35: BHP guidance
BHP guidance Group FY24e Capital and exploration expenditure (US$ bn) ~10.0 Cash basis. Split by category: Maintenance and decarbonisation capital 3.1 Includes non-discretionary spend for deferred development and production stripping; risk reduction, compliance and asset integrity; and decarbonisati
Slide 36: BHP guidance (continued)
BHP guidance (continued) Copper FY24e Medium term Copper production (kt) 1,720 – 1,910 Escondida: 1,080 – 1,180 kt; Spence: 210 – 250 kt ; Copper South Australia: 310 – 340 kt; Antamina: 120 – 140 kt (zinc 85 – 105 kt). Escondida Copper production (kt, 100% basis) 1,080 – 1,180 1,200 – 1,300 Medium
Slide 37: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact1 on FY23 Underlying EBITDA of changes of: US$ m US$1/t on iron ore price2 227 US$1/t on metallurgical coal price 17 US¢1/lb on copper price2 34 US$1/t on energy coal price2 13 US¢1/lb on nickel price 1 AUD (US¢1/A$) operations3 147 CLP (US¢0.10/
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