Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (October 2007)
31 slides from Bhp's investor presentation, Oct 2, 2007
Slide 1: Simplicity, Focus & Growth
For personal use only Simplicity, Focus & Growth Marketing Presentation to Analysts Tuesday, 2 October 2007
Slide 2: Disclaimer
For personal use only Disclaimer The views expressed here contain information 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. Any forward looking information i
Slide 3: Key topics
For personal use only Key topics • Introduction – Tom Schutte • One Business – Gideon Oberhozer (Sydney) • One Process – Mike Henry • One Measurement and Risk Management model – Paul Koppelman • Concluding Comments – Tom Schutte • Questions Marketing Briefing Slide 3 2 October 2007
Slide 4: Introduction
For personal use only Introduction • Unique centralised Marketing model - Key differentiator • Delivering value - Optimising know how - Cost control • Positioned for Growth - Maximising product pipeline Marketing Briefing Slide 4 2 October 2007
Slide 5: The Marketing business
For personal use only The Marketing business • Manages all post-asset and some pre-asset activities for the Group • Generates incremental value via marketing, trading, and supply-chain optimisation • Supports the strategic foresight of the organisation via its insight into the external environment.
Slide 6: Our market dimensions
For personal use only Our market dimensions Commercial FY07 revenue US$47.5 billion selling 27 commodities to over 1,200 customers People Staff from over 43 nationalities located around the globe The Hague Yellowknife Seoul Antwerp Antwerp Tokyo Pittsburgh Singapore Shanghai Baar Jakarta Houston Del
Slide 7: Organisation structure
For personal use only Organisation structure President Trading & ALUMINIUM Marketing Unit Assets Marketing CSG Trading & BASE METALS Human Marketing Unit Assets CSG Resources IRON ORE Assets Finance CSG & Services Trading & MANGANESE Marketing Unit Assets Global CSG Supply MET COAL Assets India CSG
Slide 8: Marketing activities
For personal use only Marketing activities ASSETS MARKETING CUSTOMER Mine Upgrade Finished Port Freight Customer Transport Pre-Treat Smelt Product Stocks Delivery 3rd Party Value-Added Product Activities Market Credit & Finance Distribution Analysis Commercial Price Risk Product Risk The Marketing b
Slide 9: One Business
For personal use only One Business Gideon Oberholzer Vice President Freight
Slide 10: One world, many chapters
For personal use only One world, many chapters “Our structure threads the chapters together which allows us to operate as One Business, through One Book, forming a Holistic view” • One view • One talent pool • One customer interface • One marketplace Marketing Briefing Slide 10 2 October 2007
Slide 11: One book, holistic view
For personal use only One book, holistic view • Many commodities and sales to all parts of the globe, but one business • The one book approach to Marketing ensures we have a holistic view of the world market • Having only one point of reference helps us anticipate change quickly Marketing Briefing S
Slide 12: One book, many opportunities
For personal use only One book, many opportunities One book means no internal barriers • e.g. Centralised freight management Recognised for third party trading and multi sourcing options. • e.g. Coal blending Cross-commodity arbitrage • e.g. Multi-commodity benefits through vessel optimisation Suppl
Slide 13: Many commodities, one integrated view
For personal use only Many commodities, one integrated view Our Assets Information Flow Marketing Customers & End Markets Marketing Briefing Slide 13 2 October 2007
Slide 14: Integration of new products
For personal use only Integration of new products • Basic market fundamentals apply across commodities. • Ease of replication across all commodities including “different” new commodities / businesses. • Cross pollination of knowledge and information. • Opportunities to develop and enhance our people
Slide 15: Benefits of one business model
For personal use only Benefits of one business model A shared model underpins all our existing commodities • Standardisation of processes & approval frameworks Scalability is key • Caters for internal growth • Provides a template for integrating newly acquired companies – e.g. WMC. Concrete benefits
Slide 16: One Process
For personal use only One Process Mike Henry Marketing Director (Energy Coal)
Slide 17: Range of activities – One set of common processes and systems
Range of activities – One set of common processes and For personal use only systems “Marketing brings common processes and systems to its broad range of value adding activities. This ensures business efficiency and application of best practice across the organisation.” Petroleum Energy Coal Stainles
Slide 18: Leveraging the systems and processes
For personal use only Leveraging the systems and processes Examples in action; • Integrated freight and distribution activities reduce freight costs – Sustainable 5 - 10% reduction relative to prevailing market prices • Integrated planning and standardised freight increase throughput – Port Hedland
Slide 19: One Measurement and Risk Management Model
For personal use only One Measurement and Risk Management Model Paul Koppelman CFO Commercial
Slide 20: Measurement enables value identification
For personal use only Measurement enables value identification • Floating Price Measures against our zero risk position • Daily Profit & Loss • Common measurement across commodities US$/t 2002 2003 2004 2005 2006 2007 Marketing Briefing Slide 20 2 October 2007
Slide 21: Measurement enables value identification
Measurement enables value identification The value add of the Marketing organisation is For personal use only greater than 1.0% of total Group sales Trading Other Products Incremental Costs Physical and financial Other products and Relative to “bare bones” trading margin services marketing organisat
Slide 22: Value generation
For personal use only Value generation Securing optimal commercial premiums for our products over the long-term Specific examples: •Copper price participation elimination ($200Million pa); •Use of multi-asset and third-party optionality – e.g. multi-sourcing in energy coal and blending in iron-ore;
Slide 23: Value generation
For personal use only Value generation Agency and Trading: • Global market footprint can be leveraged for proprietary trading profit; and • Our global scale, capabilities and systems support our ability to capture agencies Specific examples: • Trading activity, particularly in the freight market whe
Slide 24: Value generation
For personal use only Value generation Optimising the enterprise-wide supply chain and Other Products: •Freight arbitrage is a major source of value; •Economies of scale along the supply chain; and •Asset margins via yield optimisation, and absorption of operational variability Specific examples: •C
Slide 25: Value generation
For personal use only Value generation Trading Other Products Incremental Costs Physical and financial Other products and Relative to “bare bones” trading margin services marketing organisation Agency Optimise Logistics Working Capital Sales on behalf of Reduce costs along the Stocks in Marketing 3r
Slide 26: Scalability leads to lower costs
For personal use only Scalability leads to lower costs INDEX 2003 = 100 Real costs per unit of sales 175 150 125 100 BHP BILLITON MODEL 75 equity production @ fixed commodity prices 50 equity production @ 25 current commodity prices 2002 2003 2004 2005 2006 2007 Marketing adopts One Book model WMC A
Slide 27: IF we had stayed with the traditional agency model…
For personal use only IF we had stayed with the traditional agency model… Note: Costs are adjusted for changes in the exchange rate of the USD during the period 2003-07 Marketing Briefing Slide 27 2 October 2007
Slide 28: Concluding Comments
For personal use only Concluding Comments Tom Schutte President Marketing
Slide 29: Significant value add exists
For personal use only Significant value add exists Opportunity Identification & Delivery All Businesses Y Price Component X + Opportunities Delivered • Cu Price Participation M to M • Volume option removal Measurement • Alumina Pricing Future • Iron Ore Pricing Value Lost = Paradigm Shift & Market C
Slide 30: Concluding comments
For personal use only Concluding comments • We challenge industry paradigms • We embrace change • We have a unique structure which ; - makes change happen - provides ultimate scalability - is geared for growth Marketing Briefing Slide 30 2 October 2007
Slide 31: For personal use only
For personal use only