Bhp Group Ltd · ASX:BHP
Bhp — H1 FY2022 Earnings Presentation
39 slides from Bhp's earnings presentation, Feb 15, 2022
Slide 1: Results presentation for the half year ended 31 December 2021
15 February 2022 For personal use only To: Australia Securities Exchange New York Stock Exchange RESULTS PRESENTATION FOR THE HALF YEAR ENDED 31 DECEMBER 2021 Attached are the presentation slides for BHP’s HY2022 Results Presentation by the Chief Executive Officer and Chief Financial Officer. A vide
Slide 2: Record first half earnings
For personal use only Record first half earnings Half year ended 31 December 2021 Mike Henry Chief Executive Officer Escondida
Slide 3: Disclaimer
Disclaimer The information in this presentation is current as at 15 February 2022. It is in summary form and is not necessarily complete. It should be read together with the BHP Results for the half year ended 31 December 2021. Forward-looking statements For personal use only This presentation conta
Slide 4: Financial results
For personal use only Financial results Half year ended 31 December 2021 Mike Henry Chief Executive Officer Olympic Dam
Slide 5: Continued strong performance
Continued strong performance Record results despite a challenging backdrop For personal use only Fatality free for the third consecutive year Strong performance at WAIO and Petroleum Record first half earnings and strong shareholder returns Cost control and capital discipline maintained, new net deb
Slide 6: H1 FY22 operational highlights
H1 FY22 operational highlights We were safe, more reliable and delivered solid production despite a challenging operating environment For personal use only Safety Production Unit costs Disciplined A strong half Zero fatalities guidance unchanged for iron ore, copper, cost control HPI 10% compared
Slide 7: H1 FY22 financial highlights
H1 FY22 financial highlights Higher shareholder returns enabled by a strong set of results For personal use only Earnings per share EBITDA margin Free cash flow 211 US cps 64% US$ 8.5 bn 77%, on a total operations basis 4% points 43% Net debt Shareholder returns ROCE US$ 6.1 bn 150 US cps 42.9
Slide 8: H1 FY22 social value and sustainability highlights
H1 FY22 social value and sustainability highlights We have made significant progress across our goals and targets For personal use only Operational GHG emissions Climate Transition Action Plan Freshwater withdrawal 16% >85% 3% since H1 FY21, support for our Say on Climate vote, annualised compar
Slide 9: Financial results
For personal use only Financial results Half year ended 31 December 2021 David Lamont Chief Financial Officer Western Australia Iron Ore
Slide 10: Financial performance
Financial performance Operational excellence supported EBITDA margin of 64%(i), ROCE of 43%(i), strong earnings per share and record interim dividend For personal use only Summary income statement H1 FY22 % change Strong earnings delivery(ii) (US$ billion) (US cents per share) Continuing Operations
Slide 11: Group EBITDA waterfall
Group EBITDA waterfall Solid underlying performance and strong cost control but inflation an increasing headwind For personal use only Underlying EBITDA variance (US$ billion) External US$5.7 billion Controllable US$(1.1) billion 5.7 0.6 19.6 20 18.5 (0.6) (1.0) (0.1) Inflationary pressures by categ
Slide 12: Segment performance
Segment performance Strong cost control delivered despite impacts of inflation, weather and COVID-19 For personal use only Iron ore Nickel EBITDA: US$11.2 bn • 14% EBITDA margin EBITDA margin: 71% • Delivered first crystals from Kwinana Nickel Sulphate plant WAIO unit cost10: US$16.15/t • Partnershi
Slide 13: Continued capital allocation discipline
Continued capital allocation discipline Maintaining our commitment to the Capital Allocation Framework and a strong balance sheet with revised net debt target range For personal use only Shareholder Flexibility to allocate capital within our Capital Allocation returns Framework towards shareholder r
Slide 14: Framework promotes discipline in all capital decisions
Framework promotes discipline in all capital decisions Embedded approach towards evaluation of both internal projects and potential external growth options For personal use only Evaluation approach Valuation multiple H1 FY22 Base Cash returns NPV value and buy-backs Operating Capital productivity pr
Slide 15: Business update
For personal use only Business update Half year ended 31 December 2021 Mike Henry Chief Executive Officer Olympic Dam
Slide 16: Opportunity amid complex environment
Opportunity amid complex environment BHP is ready to navigate the opportunities and challenges confronting us in the near term For personal use only Viral uncertainty Geopolitical risk Demand Inflation Supply is strong is here is patchy Two years into the Structural Cyclical policy pandemic, the gen
Slide 17: Longer term: power of scale and compound growth
Longer term: power of scale and compound growth Population growth, decarbonisation and rising living standards will drive demand for energy, metals and fertilisers for decades For personal use only Population growth… …of which urban… …creates new demand… …including for capex (world GDP nominal US$*)
Slide 18: Delivering on our objectives
Delivering on our objectives We continue with the implementation of strategic priorities For personal use only Delivered … Continued progress A clear vision for our Increasing exposure to future facing commodities • Merger of Petroleum with Woodside portfolio − Jansen S1 sanctioned • Review proces
Slide 19: Social value embedded in our approach
Social value embedded in our approach Delivering on our commitment to ESG For personal use only Environmental Social Governance Committed to material Supporting community Committed to positive impact on the development, engagement accountability, disclosure environment in our sector and growth and p
Slide 20: Sector leading assets across our commodities
Sector leading assets across our commodities We are actively managing our portfolio for long-term value creation through the cycle For personal use only Maximising value Iron ore Lowest cost major globally12, no new hubs needed for at least a decade Petroleum Metallurgical coal Creation of a global
Slide 21: Woodside and Petroleum merger on track
Woodside and Petroleum merger on track High-quality, complementary portfolios combining high-margin oil and long-life LNG For personal use only Global top 10 independent energy producer14 Merger milestones and timeline (FY21 production, MMboe) 300 November 2021 Q2 CY22 Combined Signed a binding shar
Slide 22: Levers to deliver value growth
Levers to deliver value growth Increasing options through productivity, internal resources and external opportunities across varying time horizons For personal use only Organic opportunities Creating new opportunities Escondida Nickel West Brownfield Options Expansion (Copper) (Nickel) Exploration T
Slide 23: Investment proposition
Investment proposition We grow shareholder value through operational excellence, optimal allocation of capital and sustainably creating high returns For personal use only Operational Disciplined Value and returns excellence capital allocation World class Continuous Successful Strong Embedded Pipelin
Slide 24: Appendix
For personal use only Appendix
Slide 25: Footnotes
Footnotes 1. Slide 5: Zero fatalities at our operated assets. High-potential injuries (HPI) are recordable injuries and first aid cases where there was the potential for a fatality. 2. Slide 7: From FY20 baseline (15.9 Mt CO2-e), which will be adjusted for any material acquisitions and divestments b
Slide 26: Social value scorecard
Social value scorecard We are making good progress on our social value commitments For personal use only H1 H2 H1 Category1 Key indicators FY21 FY20 Target FY22 FY21 FY21 Fatalities 0 0 0 0 0 Zero work-related fatalities High Potential Injury (HPI) frequency Safety and 0.18 0.20 0.20 0.20 0.24 Year-
Slide 27: Determined to contribute to a sustainable future
Determined to contribute to a sustainable future For personal use only Overview • A charitable organisation solely funded by BHP but operates independently • Applies ‘philanthropic venture capital’ approach to pioneer bold new solutions to some of the world’s most pressing sustainable development ch
Slide 28: Petroleum merger mechanics
Petroleum merger mechanics Merger with Woodside provides choice and delivers benefits for BHP shareholders For personal use only New Woodside shares, representing 48% of the enlarged share capital of Woodside, will be distributed to BHP shareholders. The number of new shares issued on completion wil
Slide 29: Petroleum performance and plans
Petroleum performance and plans Continued operational excellence while progressing competitive pipeline of growth options For personal use only Petroleum has a strong record of performance and results… …and a competitive suite of growth projects with future optionality • Strong safety performance, g
Slide 30: Jansen S1 awards first major contracts
Jansen S1 awards first major contracts Project progressing to plan, well-scoped capital budget For personal use only Early progress Investment spend profile (US$ billion) • Jansen S1 US$5.7 bn (C$7.5 bn) project is 3% complete 1.6 following August 2021 sanction 1.2 • ~US$1.2 bn in contracts awarded
Slide 31: Technology driving smarter operations
Technology driving smarter operations Technology is a key lever for BHP to improve safety, increase production and reduce costs For personal use only Data automation Innovation Fleet Automation ~$1 bn Leaching ~200 CPY1 and ripios2 could unlock latent autonomous trucks operating globally value unloc
Slide 32: Samarco and Renova Foundation
Samarco and Renova Foundation Renova accelerates remediation, compensation spend to R$19.6 billion; restart of Samarco made significant regional contribution For personal use only Compensation Resettlement Samarco • Indemnification and financial assistance payments • 128 resettlement cases across th
Slide 33: Continued capital allocation discipline
Continued capital allocation discipline Our balance sheet is strong For personal use only H1 FY22 (on a continuing basis) Operating Capital productivity productivity Net operating cash flow US$11.5bn Maintenance capital US$1.1 bn Strong balance sheet Minimum 50% payout ratio dividend US$5.5bn Exce
Slide 34: Return on Capital Employed
Return on Capital Employed Record ROCE of 42.9% for H1 FY22 on a continuing basis For personal use only ROCE ROCE by asset H1 FY22 (%) (%) 50 60 80 Antamina2 45 50 40 35 40 30 WAIO1 30 Escondida QCoal 25 Nickel West 20 20 15 10 Pampa Norte Olympic 10 Potash Dam 0 5 0 (10) FY18 FY19 FY20 FY21 FY22 0
Slide 35: Balance sheet
Balance sheet Net debt of US$6.1 billion and gearing of 10.0% For personal use only Movements in net debt Debt maturity profile3 (US$ billion) (US$ billion) 8 8 0.5 6.1 6 1.3 (0.1) 4.1 (9.7) 10.0 6 4 2 4.1 4 0 - - - - - - (2) 2 (4) (6) 0 (8) FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Post FY21 Fre
Slide 36: BHP guidance
BHP guidance For personal use only Group (Continuing Operations) FY22e Capital and exploration expenditure (US$bn) 6.5 Cash basis. Including: Maintenance 2.8 Maintenance: Includes non-discretionary capital expenditure to maintain asset integrity, reduce risks, and meet compliance requirements. Also
Slide 37: BHP guidance (continued)
BHP guidance (continued) For personal use only Iron Ore FY22e Medium term Iron ore production (Mt) 249 – 259 Western Australia Iron Ore: 246 – 255 Mt; Samarco 3 -4 Mt. Capital and exploration expenditure (US$bn) 2.2 Western Australia Iron Ore Iron ore production (Mt, 100% basis) 278 – 288 >290 Unit
Slide 38: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities For personal use only Approximate impact1 on H2 FY22 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price2 119 US$1/bbl on oil price3 18 US$1/t on metallurgical coal price 19 US¢1/lb on copper price2 19 US$1/t on energy coal price2 7 US¢1/lb on ni
Slide 39: For personal use only
Ajuo asn feuosied 10-)