Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — H1 FY2008 Earnings Presentation
49 slides from Bhp's earnings presentation, Feb 6, 2008
Slide 1: Interim Results – 31 December 2007
For personal use only Interim Results – 31 December 2007 6 February 2008 Marius Kloppers Chief Executive Officer Alex Vanselow Chief Financial Officer
Slide 2: Disclaimer
For personal use only Disclaimer This document has been prepared by BHP Billiton and comprises the slides for a presentation concerning BHP Billiton’s preliminary statement of its report and accounts for the half year ended 31 December 2007. The views expressed in this document contain information d
Slide 3: Interim Results – Marius Kloppers, CEO
For personal use only Interim Results – 31 December 2007 Marius Kloppers Chief Executive Officer
Slide 4: Safety
For personal use only Safety • Injury rates – our 12 month rolling Total Recordable Injury Rate improved by 13 per cent to 6.4 • Our statistical measures are showing an improving trend • However, improving statistics do not guarantee safety • Tragically, we had ten fatalities in the past six months
Slide 5: Highlights – Half year ended December 2007
For personal use only Highlights – Half year ended December 2007 • Strong operating and financial results • Cost control focus is yielding excellent results • Project delivery – first production from seven new projects • Healthy volume growth from new production expected in FY 2008 • A further four
Slide 6: Interim Results – Alex Vanselow, CFO
For personal use only Interim Results – 31 December 2007 Alex Vanselow Chief Financial Officer
Slide 7: Financial highlights
For personal use only Financial highlights Half year ended December (US$m) 2007 2006 % Change Revenue 25,539 22,113 +15 Underlying EBITDA 11,167 10,494 +6 Underlying EBIT 9,623 9,134 +5 Attributable profit (excluding exceptionals) 5,995 6,168 -3 Attributable profit 6,017 6,168 -2 Net operating cash
Slide 8: Underlying EBIT by Customer Sector Group
For personal use only Underlying EBIT by Customer Sector Group Half year ended December (US$m) 2007 2006% % Change Change Petroleum 1,972 1,612 +22 Aluminium 680 840 -19 Base Metals (including Uranium) 3,367 2,889 +17 Diamonds & Specialty Products 72 78 -8 Stainless Steel Materials 799 1,427 -44 Iro
Slide 9: Underlying EBIT by Customer Sector Group – Petroleum
Underlying EBIT by Customer Sector Group %%Change For personal use only Half year ended December (US$m) 2007 2006 Change Petroleum 1,972 1,612 +22.3 • Record half year EBIT • Record half year production from global continuing operations • Cash costs flat with comparative half • Three major new proje
Slide 10: Underlying EBIT by Customer Sector Group – Aluminium, Base Metals, Stainless Steel
Underlying EBIT by Customer Sector Group % %Change For personal use only Half year ended December (US$m) 2007 2006 Change Aluminium 680 840 -19.0 • Production at record levels • Softer prices for metals and cost impacted by weaker US$ • South African power situation will impact metal production Moza
Slide 11: Underlying EBIT by Customer Sector Group – Iron Ore, Manganese, Met Coal
Underlying EBIT by Customer Sector Group %%Change For personal use only Half year ended December (US$m) 2007 2006 Change Iron Ore 1,673 1,404 +19.2 • Record Half Year EBIT • Record production and shipments • RGP3 commissioned and RGP4 on schedule Mount Newman Manganese 431 105 +310.5 • Record produc
Slide 12: Underlying EBIT by Customer Sector Group – Energy Coal, Diamonds
For personal use only Underlying EBIT by Customer Sector Group Half year ended December (US$m) 2007 2006 %%Change Change Energy Coal 277 242 +14.5 • Higher export prices driven by strong demand • Record annual production at Hunter Valley and Cerrejon • Approval of Klipspruit (+1.8mtpa export coal) a
Slide 13: Declining rate of cost increase
For personal use only Declining rate of cost increase Operating cost increase relative to preceding half year 9% 8.4% Total 8% Excl Non-Cash 6.7% 7% 5.9% 5.8% 6% 5.6% 5.5% 4.9% 5% 4.5% 4.3% 3.9% 4.0% 4% 3.0% 3% 2.2% 1.7% 2% 1% 0% H1 FY2005 H2 FY2005 H1 FY2006 H2 FY2006 H1 FY2007 H2 FY2007 H1 FY2008
Slide 14: Strong cash flow - delivering value to shareholders
Strong cash flow - delivering value to shareholders Available Available Cash Cash Flow Organic Growth1 For personal use only Flow (US$m) (US$m) (US$m) 9000 18,000 7500 6000 16,000 4500 14,000 H1 H2 3000 1500 12,000 0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 10,000 Return to Shareholders2 (US
Slide 15: Interim Results – Marius Kloppers, CEO
For personal use only Interim Results – 31 December 2007 Marius Kloppers Chief Executive Officer
Slide 16: Outlook – long term fundamentals strong, shorter term more fluid
For personal use only Outlook – long term fundamentals strong, shorter term more fluid Gross domestic product (US$bn) ISM purchasing manufacturers index 5,000 India China 58 56 4,000 54 52 3,000 50 48 2,000 46 1,000 44 42 0 40 Jan-07 Apr-07 Jul-07 Oct-07 98 99 00 01 02 03 04 05 06 F F 07 08 19 19 20
Slide 17: China's growth driven by domestic demand
China’s growth driven by domestic demand… Asian export markets more important than the US Composition of Chinese GDP For personal use only (RMB trillions) 25 Destination of Chinese exports Other 20 North 9% Europe America 24% 15 21% 46% Asia 10 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2
Slide 18: Can Chinese consumption growth offset the US slow down?
Can Chinese consumption growth offset the shorter term slow For personal use only down in the US? Share of Consumption China Share of Incremental Demand (2007, %) (1997-2007, %) 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Iron Ore Copper Energy Iron Ore Copper Energy China Indi
Slide 19: Long term demand remains intact
Long term demand remains intact… Beijing 2008 Tokyo For personal use only Beijing 2050 Paris Interim Results Slide 19 6 February 2008
Slide 20: Future growth from high quality opportunities
Future growth from high quality opportunities As at 6 February 2008 For personal use only Proposed capital expenditure WA WA Iron Iron Ore Ore Cannington Cannington Quantum <$500m <$500m $501m-$2bn $501m-$2bn $2bn+ $2bn+ Quantum 11 Life Life Ext Ext CMSA CMSA Heap Heap Leach Leach 22 Kennedy Angola
Slide 21: A track record of project delivery – progress in FY 2008
For personal use only A track record of project delivery – progress in FY 2008 • First production – Ravensthorpe, RGP3, Pinto Valley, Koala Underground, Genghis Khan, Atlantis South, Stybarrow • Progressed to execution – Newcastle Third Port, GEMCO, Kipper, Klipspruit • 12 new projects added to futu
Slide 22: Development spend in high margin businesses
For personal use only Development spend in high margin businesses Development pipeline capex EBITDA margins (Total US$16.1bn) (12 months to December 2007) 80% Petroleum 70% Other 28% 60% 33% 50% 40% 30% 15% 24% 20% Iron Ore 10% Aluminium 0% Petroleum Iron Ore Aluminium Note: Represents pipeline proj
Slide 23: A unique balance across high margin commodities
A unique balance across high margin CSM, non ferrous For personal use only and energy commodities EBITDA margin H1 FY 2008 EBITDA H1 FY 2008 (Total = US$11.4bn) Iron Ore Other Manganese CSM 1% CSM Met Coal 26% Petroleum Energy Energy Coal 49% Ag/Pb/Zn 24% Copper Nickel Non Ferrous Energy Aluminium N
Slide 24: Broad exposure to carbon steel sector demand
For personal use only Broad exposure to carbon steel sector demand Iron Ore is an important part of the mix • Geographic proximity to the growing Asian market Total Carbon Steel Sector H1 FY 2008 EBIT • Record H1 production and shipments (Total = US$2.6bn) • Plans underway to expand WAIO to 300mtpa
Slide 25: Developing world metals demand to show significant growth
For personal use only Developing world metals demand to show significant growth US$ expenditure (per capita) 50 Aluminium Copper 40 China: $2,000 per capita 30 Iron Ore 20 Coking Coal 10 10 20 30 40 GDP per capita (US$’000)* Interim Results * 1 January 2008 real US dollars Slide 25 6 February 2008 S
Slide 26: Dollar value of oil intensity per capita versus non ferrous metals
But, the dollar value of oil intensity per capita is 10 times For personal use only that of non ferrous metals US$ Expenditure (per capita) Crude Oil 500 China: $2,000 per capita 400 300 200 100 Aluminium/Copper 10 20 30 40 GDP per capita (US$’000)* Interim Results * 1 January 2008 real US dollars S
Slide 27: Well positioned to meet energy demand regardless of fuel mix
For personal use only Well positioned to meet energy demand regardless of fuel mix Projected world primary energy demand 2007 = 100 180 170 Nuclear 160 Coal 150 Gas Energy Demand 140 Renewables 130 Oil 120 110 100 90 2007 2010 2015 2020 2025 2030 Interim Results Source: EIA International Energy Outl
Slide 28: Summary
For personal use only Summary • Continued excellent operating and financial results • Unique portfolio balance provides stability • Project pipeline and global footprint to support future growth • Longer term outlook for global growth remains robust Interim Results Slide 28 6 February 2008
Slide 29: For personal use only
For personal use only
Slide 30: Appendix
For personal use only Appendix
Slide 31: Return on capital and margins
For personal use only Return on capital and margins 60% (1) (2) Return on Capital EBIT Margin 50% 48% 44% 44% 40% 38% 40% 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 H1 2008 (1) H1 2008 is calculated on an annualised basis. Interim Results (2) F
Slide 32: Underlying EBIT analysis
Underlying EBIT analysis For personal use only Half year ended Dec 2007 vs Dec 2006 US$m 12,000 461 11,000 1,635 (506) (206) 10,000 9,623 (199) (61) 9,134 (222) 9,000 (413) 8,000 7,000 6,000 5,000 4,000 3,000 (1) (2) Dec-06 Net Price Volume Exchange Inflation Cash Costs Non Cash Exploration Other De
Slide 33: Impact of major volume changes
Impact of major volume changes For personal use only Half year ended Dec 2007 vs Dec 2006 Total volume(1) variance US$461 million US$m 450 Copper 387 350 250 Met Iron 150 Ore Other Coal Aluminium/ 83 81 102 Alumina D&SP 44 50 24 -50 Energy Coal Petroleum (9) (25) -150 -250 Nickel (226) Interim Resul
Slide 34: Impact of major commodity price
Impact of major commodity price For personal use only Half year ended Dec 2007 vs Dec 2006 Total price variance US$1,635 million(1) US$m Petroleum 500 466 Base 400 Metals Manganese Iron Ore Energy 350 346 Coal 333 308 300 200 SSM 97 100 0 Diamonds (23) Aluminium -100 (44) -200 Met Coal (198) Interim
Slide 35: Cash flow
For personal use only Cash flow Half year ended December (US$m) 2007 2006 Operating cash flow and dividends (1) 11,600 10,188 Net interest paid (313) (231) Tax paid (2) (3,417) (2,841) Net operating cash flow 7,870 7,116 Capital expenditure (3,753) (3,466) Exploration expenditure (598) (312) Purchas
Slide 36: Global commodity and energy consumption
Global commodity and energy consumption – China is the world’s largest consumer of key raw materials Aluminium Copper For personal use only China Other China Other India Europe India Europe USA Japan USA Japan Steel Energy China Other China Other India USA Europe India Europe Japan USA Japan Interim
Slide 37: China
China • Diversification remains for sales into China For personal use only • Currently 20% of total company revenues US$m 5,500 5,293 5,013 5,000 ROW Europe 4,500 Australia 3,999 4,000 3,611 3,500 Japan China 2,946 3,000 Other Asia Nth 2,500 America 2,407 2,000 1,588 1,500 1,357 1,075 1,000 785 371
Slide 38: EBIT margin by Customer Sector Group
For personal use only EBIT margin(1) by Customer Sector Group 70% 2005 2006 2007 H1 2008 60% 50% 40% 30% 20% 10% 0% Petroleum Aluminium Base Metals Diamonds Stainless Iron Ore Manganese Met Coal Energy & Specialty Steel Coal Products Materials Interim Results Slide 38 6 February 2008 (1) All periods
Slide 39: Capital & exploration expenditure
Capital & exploration expenditure US$ Billion 2002 2003 2004 2005 2006 2007 2008F (1) 2008 Forecast includes For personal use only US$600m for Petroleum Growth 1.9 2.0 1.8 2.6 4.2 5.2 7.1 Sustaining & Other 0.9 0.7 0.8 1.2 1.4 1.4 1.5 Exploration (1) 0.4 0.3 0.5 0.5 0.8 0.8 1.3 Total 3.2 3.0 3.1 4.3
Slide 40: Portfolio management – US$6.1bn of disposals
For personal use only Portfolio management – US$6.1bn of disposals US$m 7,000 Proceeds from US$m 6,000 sale of assets Dec 2007 139 5,000 FY 2007 444 4,000 FY 2006 934 FY 2005 1,035 3,000 FY 2004 277 2,000 FY 2003 (1) 2,472 1,000 FY 2002 845 Total proceeds 6,146 0 (1) Includes BHP Steel demerger and
Slide 41: Key net profit sensitivities
For personal use only Key net profit sensitivities Approximate impact(1) on FY 2008 net profit (US$m) after tax of changes of: US$1/t on iron ore price 60 US$1/bbl on oil price 30 US$1/t on metallurgical coal price 25 USc1/lb on aluminium price 25 USc1/lb on copper price 25 US$1/t on energy coal pri
Slide 42: Sanctioned development projects (US$9.6bn)
Sanctioned development projects (US$9.6bn) Share of For personal use only Initial Minerals Projects Commodity Approved Production Production Capacity Progress Capex (100%) Target Date US$m Alumar Refinery Expansion On time and Alumina 725 Q2 CY09 2 million tpa (Brazil) – 36% budget. Western Australi
Slide 43: Sanctioned development projects cont.
For personal use only Sanctioned development projects (US$9.6bn) cont. Share of Minerals Projects Initial Commodity Approved Production Production Capacity Progress (cont’d) Capex (100%) Target Date US$m On revised Yabulu (Australia) – 100% Nickel 556 Q1 CY08 45,000 tpa nickel schedule and budget On
Slide 44: Sanctioned development projects cont.
Sanctioned development projects (US$9.6bn) cont. Share of For personal use only Initial Petroleum Projects Approved Production Capacity Commodity Production Progress (cont’d) Capex (100%) Target Date US$m 800 million cubic feet gas North West Shelf Angel Oil/Gas 200 End CY08 On time and per day and
Slide 45: Development projects in feasibility (US$6.5bn)
For personal use only Development projects in feasibility (US$6.5bn) Minerals Projects Estimated Share Forecast Initial Project Capacity Commodity of Capex* (US$4.7bn) US$m Production* (100%)* Worsley Efficiency and Growth Alumina 1,750 End CY10 1.1 million tpa (Australia) – 86% Guinea Alumina Proje
Slide 46: Development projects in feasibility cont.
For personal use only Development projects in feasibility (US$6.5bn) cont. Minerals Projects Estimated Share Forecast Initial Project Capacity Commodity of Capex* (US$4.7bn) US$m Production* (100%)* Mt Arthur Coal UG (Australia) – Energy Coal 475 End CY10 7 million tpa saleable coal 100% Navajo Sout
Slide 47: Development projects commissioned since July 2001
For personal use only Development projects commissioned since July 2001 Our Share of Capex Initial Production Date Project Budget Actual Budget Actual US$m US$m Antamina (Peru) – 33.75% 775 752 Q2 CY01 Q2 CY01 Typhoon (US) – 50% 128 114 Q3 CY01 Q3 CY01 Tintaya Oxide (Peru) – 99.9% 138 120 Q2 CY02 Q2
Slide 48: Development projects commissioned since July 2001
Development projects commissioned since July 2001 Our Share of Capex Initial Production Date For personal use only Project Budget Actual Budget Actual US$m US$m WA Iron Ore Accelerated Expansion (Australia) – 85% 83 80 Q2 CY04 Q2 CY04 NWS Train 4 (Australia) – 16.7% 247 252 Mid CY04 Mid CY04 ROD (Al
Slide 49: Development projects commissioned since July 2001
Development projects commissioned since July 2001 Our Share of Capex Initial Production Date For personal use only Project Budget Actual Budget Actual US$m US$m Escondida Sulphide Leach (Chile) – 57.5% 500 566 H2 CY06 Q2 CY06 Western Australia Iron Ore RGP2 (Australia) – 85% 489 501 H2 CY06 Q2 CY06