Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — H1 2009 Earnings Presentation
36 slides from Bhp's earnings presentation, Feb 4, 2009
Slide 1: Interim Results 31 December 2008
Mt Arthur Coal, Australia For personal use only Interim Results 31 December 2008 Marius Kloppers Chief Executive Officer Alex Vanselow Chief Financial Officer 4 February 2009
Slide 2: Disclaimer
For personal use only Disclaimer Reliance on Third Party Information The views expressed here contain information that have been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of
Slide 3: Interim Results December 2008
Western Australia Iron Ore, Australia For personal use only Interim Results 31 December 2008 Marius Kloppers Chief Executive Officer
Slide 4: Highlights
For personal use only Highlights Underlying EBITDA up 25% to $13.9 billion Underlying EBIT up 24% to $11.9 billion Attributable profit (excluding exceptionals) up 2% to $6.1 billion Robust cashflow of $13.1 billion, up 74% Earnings per share 110.1 US cents, up 3% Interim dividend of 41 U
Slide 5: Interim Results December 2008 - Chief Financial Officer
Spence Copper, Chile For personal use only Interim Results 31 December 2008 Alex Vanselow Chief Financial Officer
Slide 6: Financial Highlights
For personal use only Financial Highlights Half Year Ended December (US$m) 2008 2007 Change Revenue 29,780 25,539 16.6% Underlying EBITDA 13,939 11,167 24.8% Underlying EBIT 11,899 9,623 23.7% Attributable Profit (excluding exceptionals) 6,128 5,995 2.2% Attributable Profit 2,617 6,017 (56.5)% Net O
Slide 7: Exceptional Items
For personal use only Exceptional Items Gross Tax Net Half Year Ended 31 December 2008 US$m US$m US$m Exceptional Items by Category Suspension of Ravensthorpe Nickel Operations (3,361) 1,008 (2,353) Impairment of Other Operations (356) (60) (416) Newcastle Steelworks Rehabilitation (508) 152 (356) L
Slide 8: Underlying EBIT by Customer Sector
Underlying EBIT by Customer Sector For personal use only Group Half Year Ended December (US$m) 2008 2007 Change Petroleum 2,675 1,968 36% Aluminium 289 680 (58)% Base Metals (including Uranium) (111) 3,367 (103)% Diamonds & Specialty Products 79 72 10% Stainless Steel Materials (752) 799 (194)% Iron
Slide 9: Decline in Input Cost Yet to be Realised
For personal use only Decline in Input Cost Yet to be Realised Total cash cost variance – US$(1,610) million (US$m) Operating 150 Shipping & Improvements Structural Demurrage 82 50 Non Structural 12 (50) (150) Other Maintenance (126) (118) (250) Mining/ Grade One-offs (202) (350) (298) Labour & (450
Slide 10: Net Interest and Tax
For personal use only Net Interest and Tax Half Year Ended December (US$m) 2008 2007 Change Net Interest Expense 332 341 2.6% Taxation Expense (excluding exceptionals) Underlying Tax Expense 3,538 2,798 26.4% Royalty Related Taxation 351 269 30.5% Foreign Exchange Impacts 1,163 44 2,543.2% Underlyin
Slide 11: Strong Cash Flow - Delivering Value to Shareholders
Strong Cash Flow – For personal use only Delivering Value to Shareholders Available Cash Flow Organic Growth(a) (US$bn) (US$bn) 20 9 H2 18 H1 6 16 3 14 0 1H2009 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 12 10 8 Return to Shareholders(b) (US$bn) 6 9 4 6 2 3 FY2002 FY2003 FY2004 FY2005 FY2006 F
Slide 12: Well Positioned and Proactive
For personal use only Well Positioned and Proactive Indefinite suspension of Ravensthorpe nickel operation, and cessation of mixed nickel cobalt hydroxide processing at Yabulu Temporary suspension of two pellet plants at Samarco Iron Ore to be reviewed at the end of March 2009 Temporary reduct
Slide 13: Interim Results December 2008 - Chief Executive Officer
North West Shelf Petroleum, Australia For personal use only Interim Results 31 December 2008 Marius Kloppers Chief Executive Officer
Slide 14: Downside Risk Remains
For personal use only Downside Risk Remains Commodity Price Movement 6 Months to 31 December 2008 (%) (68) WTI (67) Copper (56) Iron Ore (53) Aluminium (50) Nickel (49) Energy Coal (45) Lead (40) Zinc (80) (70) (60) (50) (40) (30) (20) (10) 0 Source: Datastream; Iron ore prices – Steel Business Brie
Slide 15: Growth Forecasts Continue to be Revised Downwards
Growth Forecasts Continue to be Revised For personal use only Downwards YOY Real GDP Growth (%) 5 4 3 Actual Jan 2008 2 Apr 2008 Jul 2008 Oct 2008 1 Jan 2009 0 (1) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 Source: Global Insight (World) Interim Results Presentation, 4 Febru
Slide 16: Absolute OECD Demand is Important
For personal use only Absolute OECD Demand is Important Global Consumption – 2008 (%) 100 China 90 80 70 60 50 40 Ex China 30 20 10 0 Iron Ore Energy Steel Zinc Alumina Aluminium Copper Nickel Oil Coal Source: CRU, Brook Hunt, IISI, PEL, BP Statistical Review of Energy, China Customs, BHP Billiton e
Slide 17: The Outlook for China
For personal use only The Outlook for China Steel Use by Sector China’s Urban Residential Floor Space (2008) (Billions of Square Metres) Home Appliances 35 33 Other 1% 6% Autos and Ship-building 30 5% Metal Goods 25 24 6% 20 18 Construction 15 Machinery 48% 20% 10 9 5 Infrastructure 14% 0 2000 2008
Slide 18: Industry Landscape has Changed
For personal use only Industry Landscape has Changed Enterprise Value(d) (EVA) Desired Minimum Credit Rating(c) (US$10bn) 50 Need Financial Well 40 Restructuring Positioned BHP 30 Billiton ROIC – WACC(b) 20 10 Breakeven 0 (10) Possible Need Operating Distress Restructuring (20) 0 1 2 3 4 5 6 Z Predi
Slide 19: Future Supply Will be Impacted
For personal use only Future Supply Will be Impacted Capital Expenditure for the Global Mining Industry (US$bn) 120 116 108 110 100 92 90 80 72 70 61 62 59 60 56 53 51 52 46 44 48 50 43 43 Exploration 42 40 42 40 37 33 30 20 Investment 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Slide 20: We are in a Unique Position
For personal use only We are in a Unique Position Net Gearing Interest Cover (%) (Times) 40 Net Gearing (LHS) 100 EBITDA Interest Cover 30 75 20 50 10 25 0 0 H1 FY FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 2009 Moody’s Investment A3 A2 A1 A1 Services Standard & Poor’s A- A A+ A
Slide 21: Capital & Exploration Expenditure
For personal use only Capital & Exploration Expenditure US$bn FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009F FY 2010F Growth 1.9 2.0 1.7 2.6 4.0 5.5 6.1 8.7 Sustaining and Other 0.8 0.7 0.9 1.3 2.1 1.6 1.8 1.3 Exploration(a) 0.4 0.3 0.5 0.5 0.8 0.8 1.4 1.3 Total 3.1 3.0 3.1 4.4 6.9
Slide 22: Summary
For personal use only Summary Strategy remains unchanged Simplicity Robust first half result Weak markets persist We will be impacted, but are well positioned in the industry Accountability Our focus remains on long term shareholder value creation Effectiveness Interim Results Presentation
Slide 23: For personal use only
édl bhpbilliton ourcing the future
Slide 24: Appendix
For personal use only Appendix
Slide 25: Return on Capital and Margins
For personal use only Return on Capital and Margins (%) 60 Return on Capital (a) EBIT Margin 50 48 48 46 44 40 40 38 38 35 30 29 30 30 24 20 21 20 13 11 10 0 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 H1 2009 (a) FY 2005 to FY 2008 are shown on the basis of IFRS. Prior periods are calcu
Slide 26: Delivering Superior Returns to Shareholders
Delivering Superior Returns For personal use only to Shareholders Ordinary dividends per share Earnings per share (US cents per share) (US cents per share) 80 300 H2 70 H1 250 60 200 50 40 150 30 100 20 50 10 0 0 (a) FY 2005 FY 2006 FY 2007 FY 2008 1H 2009 FY 2005 FY 2006 FY 2007 FY 2008 1H 2009 Not
Slide 27: Underlying EBIT Analysis
Underlying EBIT Analysis For personal use only Half Year Ended Dec 2008 vs Dec 2007 (US$m) 16,000 518 1,457 14,000 2,960 (1,610) 11,899 12,000 (262) (423) (251) (113) 10,000 9,623 8,000 6,000 4,000 2,000 0 Dec 2007 Net Price(a) Exchange Other (b) Cash Non Cash Inflation Volume(c) Exploration Dec 200
Slide 28: Impact of Major Commodity Price Movements
Impact of Major Commodity Price Movements For personal use only Half Year Ended Dec 2008 vs Dec 2007 Total price variance – US$2,960 million(a) (US$m) 4,000 Met Coal 3,000 2,816 Iron Ore 2,043 2,000 Manganese 1,093 Energy Coal 1,000 716 Petroleum Diamonds 219 46 00 Aluminium (1,000) (152) Nickel (91
Slide 29: Impact of Major Volume Changes
Impact of Major Volume Changes For personal use only Half Year Ended Dec 2008 vs Dec 2007 Total volume(a) variance – US$(251) million (US$m) 500 Petroleum 401 400 300 Iron Ore 204 200 100 00 D&SP Energy Coal Met Coal Aluminium/ (100) (12) (32) (36) Alumina (200) (42) Manganese Nickel (300) (193) (20
Slide 30: Cash Flow
For personal use only Cash Flow Half Year Ended December (US$m) 2008 2007 Operating Cash Flow and Dividends 17,004 11,258 Net Interest Paid (147) (313) Tax Paid (a) (3,763) (3,417) Net Operating Cash Flow 13,094 7,528 Capital Expenditure (5,347) (3,753) Exploration Expenditure (620) (598) Purchases
Slide 31: Strong Return On Capital Employed Despite Record Capital Investments
Strong Return On Capital Employed For personal use only Despite Record Capital Investments Capital and Exploration Expenditure ROCE (US$bn) (%) 12 Acquisitions (LHS) 40 Capitalised Exploration (LHS) 35 10 Capex (LHS) ROCE (RHS) 30 8 25 6 20 15 4 10 2 5 0 0 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY
Slide 32: Maturity Profile Analysis
For personal use only Maturity Profile Analysis(a) Debt Balances (US$m(b)) 2,000 1,600 1,200 800 400 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Post 2020 US$ Euro Bank CP Jointly Controlled Bonds Bonds Debt Issuance Entities(c) Subsidiaries(d) % of Portfolio 61% 16% 0% 0% 20% 3% Capita
Slide 33: Diversification Remains for Sales into China
Diversification Remains for For personal use only Sales into China 17% of total company revenues in H1 2009 H1 2009 Revenue by Location of Customer (US$m) ROW 7,000 Europe 6,657 Australia 6,000 5,293 5,013 4,951 Other 5,000 China Japan SSM 3,999 Energy Coal 4,000 3,611 North America Manganese Othe
Slide 34: Summary of Key FX Components in Tax Expense
Summary of Key FX Components For personal use only in Tax Expense December 2008 December 2007 Restatement of Expense / Income Expense / Income US$m US$m Current Tax Payable (1,080) 123 Deferred Tax Balances on Fixed Assets 2,688 (266) Deferred Tax Balances on US$ Debt (392) 96 Deferred Tax Balances
Slide 35: Key Net Profit Sensitivities
For personal use only Key Net Profit Sensitivities Approximate Impact(a) on FY 2009 Net Profit After Tax of Changes of US$m US$1/t on Iron Ore Price 80 US$1/bbl on Oil Price 35 US$1/t on Metallurgical Coal Price 25 USc1/lb on Aluminium Price 25 USc1/lb on Copper Price 20 US$1/t on Energy Coal Price
Slide 36: Provisional Pricing
For personal use only Provisional Pricing LME – Copper, Grade A Cash US$/mt – A.M. Official (US$) 3 Month 3 Month 3 Month 3 Month 5.0 4.5 LME Q2 2008 ave LME Q1 2008 ave US$3.86lb 4.0 US$3.51/lb 3.5 3.0 LME Q3 2008 ave US$3.49lb 2.5 2.0 LME Q1 2009 YTD ave US$1.44lb 1.5 LME Q4 2008 ave 1.0 US$1.77lb