Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — FY2011 Earnings Presentation
36 slides from Bhp's earnings presentation, Aug 24, 2011
Slide 1: Preliminary results Full year ended 30 June 2011
Preliminary results Full year ended 30 June 2011 Marius Kloppers Chief Executive Officer Alex Vanselow Chief Financial Officer 24 August 2011
Slide 2: Disclaimer
Disclaimer Reliance on Third Party Information The views expressed herein contain information that has 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 the information. Thi
Slide 3: Disclaimer (continued)
Disclaimer (continued) Exploration Results and Mineral Resources This presentation includes information on Exploration Results (Potential Mineralisation) and Mineral or Coal Resources (inclusive of Ore Reserves). Mineral Resources are compiled by: H Arvidson (MAusIMM) – Western Australian Iron Ore (
Slide 4: Preliminary results Full year ended 30 June 2011
BMA Preliminary results Full year ended 30 June 2011 Marius Kloppers Chief Executive Officer
Slide 5: Record financial results
Record financial results Underlying EBIT of US$32.0 billion, up 62% Attributable profit (excluding exceptionals) of US$21.7 billion, up 74% Earnings per share (excluding exceptionals) of 393.5 US cents, up 76% Net operating cash flow of US$30.1 billion, up 78% Successful acquisition of sub
Slide 6: Strong operating performance
Strong operating performance Further improvement in safety performance Record production across four commodities and ten operations – Successful ramp-up of Western Australia Iron Ore supply chain to 155 mtpa rate¹ – First production from MAC20 energy coal project – Substantial increase in Escond
Slide 7: A challenging environment
A challenging environment Supply side disruption Newman Industry wide capital and operating cost pressure Increasingly tight market for skilled labour and equipment Evolving regulatory landscape Preliminary results, 24 August 2011 Slide 7
Slide 8: Preliminary results Full year ended 30 June 2011
Shenzi Preliminary results Full year ended 30 June 2011 Alex Vanselow Chief Financial Officer
Slide 9: Underlying EBIT analysis Year ended June 2011 versus June 2010
Underlying EBIT analysis Year ended June 2011 versus June 2010 EBIT variance (US$ billion) Uncontrollable Controllable 40.0 17.2 33.8 1.2 32.0 (2.5) (0.6) (0.6) (1.4) 30.0 (1.0) Net US$0.6 billion 19.7 20.0 10.0 0.0 FY10 Price¹ Exchange Inflation Sub-total New Volume Costs² Other FY11 operations 1.
Slide 10: Strong operating performance despite external challenges
Strong operating performance despite external challenges Volume variance US$572 million (US$ million) 1,000 92 177 572 (93) 1,153 (112) 500 (287) GoM 0 Other (500) (930) (1,000) Iron Ore Energy Coal Other SSM D&SP Metallurgical Petroleum New and Coal acquired operations¹ 1. Reflects strong performan
Slide 11: World class assets and consistent execution of a well defined strategy
World class assets and consistent execution of a well defined strategy Diversified peer production comparison (copper equivalent units¹) 100 Pre-GFC Today BHP Billiton Peer group 1. Copper equivalent units based on long term consensus price estimates where available, indexed to 100. Note: Peer group
Slide 12: Industry wide cost pressures continue to build
Industry wide cost pressures continue to build Cash cost variance¹ (US$ million) 0 (100) (200) (175) (195) (300) (400) (375) (412) (500) Raw materials Labour & contractors Maintenance Other Structural Non structural 1. Excluding negative non-cash cost variance of US$255 million. Preliminary results,
Slide 13: Increasing tightness for key consumables and equipment
Increasing tightness for key consumables and equipment Large mining tyres Average mining truck lead times (market supply and demand) (months) Market demand Primary supplier radial capacity 2006 2008 2010 2012 2014 2016 2006 2007 2008 2009 2010 2011 Source: BHP Billiton analysis. Preliminary results,
Slide 14: A uniquely diversified portfolio
A uniquely diversified portfolio Underlying EBIT¹ Underlying EBIT margin¹ (FY11, US$ billion) (FY11, %) 35 Metallurgical Coal 35% Metallurgical Coal 30 Manganese Manganese 29% 25 Ferrous Iron Ore 66% 51.6% Iron Ore SSM 16% 20 D&SP 39% 15 SSM D&SP Base Metals 50% Non Ferrous Base Metals 10 25.5% Alum
Slide 15: Our business model delivers strong margins and superior returns
Our business model delivers strong margins and superior returns Underlying EBIT margin1 Underlying return on capital (%) (%) 60 50 50 40 40 30 30 20 20 10 10 0 0 FY07 FY08 FY09 FY10 FY11 FY07 FY08 FY09 FY10 FY11 BHP Billiton Peer group 1. Includes third party trading activities. Note: Peer group inc
Slide 16: Disciplined and predictable approach to capital management
Disciplined and predictable approach to capital management Sources and uses of cash¹ Gearing (US$ billion) (%) 40 40 35 35 30 30 25 25 Net operating cash flow 20 Capital and exploration expenditure 20 Cash dividends 15 15 Capital management Acquisitions 10 10 Gearing 5 5 0 0 FY02 FY03 FY04 FY05 FY06
Slide 17: Preliminary results Full year ended 30 June 2011
Port Hedland Preliminary results Full year ended 30 June 2011 Marius Kloppers Chief Executive Officer
Slide 18: Long term demand underpinned by emerging economic growth
Long term demand underpinned by emerging economic growth Economic growth has slowed Global GDP growth rate (% per annum) – Concerns regarding sovereign 6 Developed economies indebtedness Developing economies 5 – A protracted OECD recovery remains our base case 4 – Tighter monetary policy in the de
Slide 19: A constrained supply response
A constrained supply response Bowen Basin cumulative rainfall Multiple disruptions to existing supply (millimetres) – Queensland metallurgical coal 1,400 FY11 – Indian iron ore FY01 – FY10 average 700 – Chilean copper – Middle Eastern/North African oil 0 Nov May Jul Aug Sep Oct Jan Jun Dec Feb Mar
Slide 20: Market fundamentals supported by higher cost sources of supply
Market fundamentals supported by higher cost sources of supply Iron ore cost curve Capital intensity – iron ore (US$ per tonne, 62-63% Fe, CIF China equivalent basis) (US$ per annual tonne) 160 2001 300 2005 140 2010 250 Long term price forecast - 2001 120 Long term price forecast - 2005 Long term p
Slide 21: Uniquely diversified, tier 1 resources
Uniquely diversified, tier 1 resources Legend Ratio (years) Minerals - Minimum Mineral Inventory life at Saskatchewan FY10 production rates Potash 100+ Petroleum – Minimum inventory life based on FY11 production rates 100+ Onshore US Petroleum¹ Olympic Dam Copper/Uranium 100+ 100+ Escondida mineral
Slide 22: A 'hub based' project model = a simple and scalable organisation
A ‘hub based’ project model = a simple and scalable organisation Underlying EBIT¹ (FY11) Western Australia Queensland Coal Iron Ore Execution: Daunia Hay Point Stage 3 Expansion Queensland Other Coal Feasibility: Escondida Caval Ridge Saskatchewan Potash Pre-feasibility: Feasibility: Olympic Dam BMC
Slide 23: Petrohawk – a substantial resource acquisition
Petrohawk – a substantial resource acquisition Total enterprise value of Acceleration of Petrohawk’s development spend (US$ million net, real) ~US$15.1 billion¹ 7,000 Natural gas is a preferred fuel in a 6,000 low carbon world 5,000 Complements our recent 4,000 Fayetteville shale acquisition a
Slide 24: Execution of our tier 1 strategy will create strong and predictable, high margin growth
Execution of our tier 1 strategy will create strong and predictable, high margin growth Long term production growth (copper equivalent units¹) 200 150 100 50 0 FY11 FY15 FY20 1. Production from continuing operations converted to copper equivalent units based on long term consensus price estimates wh
Slide 25: Record financial results and a substantial commitment in tier 1 growth
Record financial results and a substantial commitment in tier 1 growth Strong operating performance and record financial results Acceleration of our organic growth program with the approval of 11 major projects for a total investment commitment of US$12.9 billion Successful acquisition of onsh
Slide 26: cdl
cdl bhpbilliton resourcing the future
Slide 27: Appendix
Appendix sé bhpbilliton resourcing the future
Slide 28: Impact of major commodity price movements Year ended June 2011 versus June 2010
Impact of major commodity price movements Year ended June 2011 versus June 2010 Total price variance¹ (US$ million) 7,900 8,000 7,000 6,000 5,000 4,000 3,348 3,000 2,138 2,000 1,521 861 1,000 559 435 366 100 0 Iron Ore Base Metals Metallurgical Petroleum Energy Coal Aluminium SSM D&SP Manganese Coal
Slide 29: Rate of cost change
Rate of cost change Operating cost movement relative to preceding year¹ (%) 14.0 Total Excluding non-cash 10.0 9.0 8.5 7.6 6.8 6.0 5.3 4.9 4.9 4.9 4.3 4.3 4.0 3.6 2.0 0.0 (0.7) (2.0) (6.0) FY05 FY06 FY07 FY08 FY09 FY10 FY11 1. Excluding the impact of inflation, foreign exchange, price linked costs a
Slide 30: Summary of key FX components in tax expense/(income)
Summary of key FX components in tax expense/(income) June 2011 June 2010 Restatement of expense/(income) expense/(income) US$ million US$ million Current tax payable 695 266 Deferred tax balances on fixed assets (2,481) (396) Deferred tax balances on US$ debt 234 289 Deferred tax balances on timing
Slide 31: A weaker US dollar has 'hidden' implications for costs
A weaker US dollar has ‘hidden’ implications for costs Foreign exchange gain/(loss) on balance sheet monetary items (US$ million) 0 (200) (251) (400) (140) (129) (600) (118) (89) 54 (800) (54) (38) (807) (29) (13) (1,000) Iron Ore Met Petroleum Base Energy SSM Aluminium Manganese D&SP G&U EBIT Coal
Slide 32: The power of our diversified model
The power of our diversified model EBIT margin¹ (%) 75 Petroleum Aluminium 50 Base Metals D&SP SSM Iron Ore 25 Manganese Metallurgical Coal Energy Coal Total 0 FY02² FY03 FY04 FY05 FY06 FY07 FY08 FY09² FY10 FY11 1. Calculated on the basis of UKGAAP for periods prior to FY05, except for the exclusion
Slide 33: Capital and exploration expenditure
Capital and exploration expenditure US$ billion FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12F Growth 1.9 2.0 1.7 2.6 4.0 5.5 6.1 7.3 8.1 9.4 Sustaining and Other 0.8 0.7 0.9 1.3 2.1 1.6 1.8 2.0 1.7 2.2 Exploration 0.4 0.3 0.5 0.5 0.8 0.8 1.4 1.3 1.3 1.2 Total 3.1 3.0 3.1 4.4 6.9 7.9 9.3 10
Slide 34: World class diversified project pipeline
World class diversified project pipeline Ferrous Olympic Dam IndoMet Non-ferrous Project 2 Coal Expansion Cerrejon P500 DRC Energy Smelter Illawarra Coal Expansion Potash Yeelirrie Jansen Scarborough Potash Stage 3 Kipper Young MAC 32 Escondida RBM Oxide Leach Olympic Dam Ore Access Broad- WAIO Theb
Slide 35: Maturity profile analysis
Maturity profile analysis Debt balances¹ (US$ million²) 3,500 2,800 2,100 1,400 700 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Post 2020 US$ Euro Bank CP Jointly Controlled Bonds Bonds Debt Issuance Entities3 Subsidiaries4 % of portfolio 56% 28% 0% 0% 14% 2% Capital Markets 84% Bank Supported 0%
Slide 36: Key net profit sensitivities
Key net profit sensitivities Approximate impact¹ on FY12 net profit after tax of changes of US$ million US$1/t on iron ore price 90 US$1/bbl on oil price 35 US$1/t on metallurgical coal price 20 US¢1/lb on aluminium price 20 US¢1/lb on copper price 20 US$1/t on energy coal price 20 US¢1/lb on nickel