Bhp Group Ltd · ASX:BHP
Bhp — H1 FY24 Earnings Presentation
35 slides from Bhp's earnings presentation, Feb 20, 2024
Slide 1: December 2023 Half year results
December 2023 Half year results Western Australia Iron Ore
Slide 2: Disclaimer
Disclaimer The information in this presentation is current as at 20 February 2024. 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 2023. Forward-looking statements This presentation contains forward-looking st
Slide 3: Performance summary
Performance summary Half year ended 31 December 2023 Mike Henry Chief Executive Officer Escondida
Slide 4: Working safely
Working safely A coworker was fatally injured at BMA; we are committed to preventing fatalities and serious injuries High-potential injury (HPI) frequency (Frequency rate) (Events) • We are saddened by a coworker losing their life while at work 0.40 45 at Saraji, BMA, in January this year • Investig
Slide 5: H1 FY24 performance
H1 FY24 performance Coworker tragically lost life in fatal incident at BMA in January 2024 All assets on track to meet FY24 guidance1; BMA guidance revised Half year dividend of 72 US cents per share Copper South Australia integrated and delivering value Jansen Stage 2 approved; expected to deliver
Slide 6: Financial results
Financial results Half year ended 31 December 2023 David Lamont Chief Financial Officer Jansen
Slide 7: Financial performance
Financial performance Solid operating performance delivers strong underlying results Summary financials Income statement (US$ bn, Underlying) • Underlying EBITDA of US$13.9 bn 30 ‒ Underlying EBITDA margin of 53.3% 27.2 Taxes and royalties: 25 US$5.0 bn • Adjusted effective tax rate of 31.0%3 ‒ Adju
Slide 8: Exceptional items
Exceptional items H1 financials impacted by events in nickel and at Samarco Western Australia Nickel Samarco Structural challenges in nickel industry, expected to persist Good progress on remediation and compensation • Surge in supply from Indonesia and acceptance on the London Metal • Renova Founda
Slide 9: Group earnings waterfall
Group earnings waterfall Strong controllable cost performance Earnings variance and drivers (US$ bn) Year on year comparison Current year reconciliation 20 External US$0.7 bn Controllable US$0.0 bn H1 FY24 income statement impacts 15 0.8 0.1 0.3 13.9 0.1 13.9 13.2 (0.2) (0.4) Inflationary pressures
Slide 10: Segment performance
Segment performance Iron ore Nickel Production: 129.0 Mt Production: 39.8 kt Average realised price: US$103.70/wmt Average realised price: US$18,602/t EBITDA margin: 69% EBITDA margin: (24)% WAIO unit cost16: US$18.46/t WAIO C1 unit cost17: US$15.98/t Copper Potash Production: 894.4 kt • J
Slide 11: Business update
Business update Half year ended 31 December 2023 Mike Henry Chief Executive Officer Copper South Australia
Slide 12: Portfolio positively leveraged to megatrends
Portfolio positively leveraged to megatrends BHP portfolio shaped to compete in a complex, but opportunity-rich environment Traditional demand Decarbonisation Attractive fundamentals Demand amplification, rising material intensity Population growth Climate-positive land use Urbanisation Decarbonisin
Slide 13: Growing value over multiple time horizons
Growing value over multiple time horizons A substantial, growing production base with significant long-term optionality A strong pipeline of growth in execution and under study… … with additional potential opportunities… 20 Illustrative timeline FY24 FY25 FY26 FY27 FY28 FY29 FY30+ Jansen Stages 3 &
Slide 14: Portfolio diversification from an attractive commodity
Portfolio diversification from an attractive commodity Jansen will be a modern potash mine, expected to enter the market towards the bottom of the global cost curve23 • Doubles planned potash production capacity to ~8.5 Mtpa • ~US$300 m in potential construction synergies Stage 2 potential for • Exp
Slide 15: Copper SA: consolidating a significant resource base
Copper SA: consolidating a significant resource base Value already delivered ahead of further asset optimisation. Growth via potential two stage smelter FID in FY26/FY27 Successful integration… Asset President and leadership team established Projects tracking in line with BHP estimates Strong H1 ope
Slide 16: Chilean copper options advancing
Chilean copper options advancing A range of growth options being progressed across our copper assets • On track for an update in CY24 • Studies at Escondida – New concentrator to replace Los Colorados – Expansion at Laguna Seca 1 and 2 concentrators – Five leaching technologies are under study, in t
Slide 17: BMA: a leading producer of higher quality met coal
BMA: a leading producer of higher quality met coal 28 Blackwater and Daunia sale delivers tighter, high margin coal portfolio29 Increasing exposure to PHCC… … a higher value product… … within a growing market (% of coal product by quality, BHP share) (Relative price FOB Australia, CY19-23 avg.) (HCC
Slide 18: Investment proposition
Investment proposition Attractive returns underpinned by operational excellence, capital allocation discipline and social value commitment Operational Disciplined Value and returns excellence capital allocation World class Differentiated Agile decision Strong Capital A framework Commitment to Increa
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Slide 20: Footnotes
Footnotes 1. Slide 5: FY24 production guidance ranges remain unchanged for all assets, with the exception of BMA which has been lowered to between 23 and 25 Mt (46 – 50 Mt at 100%) excluding Blackwater and Daunia from the expected sale completion date of 2 April 2024. WAIO, Escondida and Spence are
Slide 21: Appendix
BHP Appendix
Slide 22: Capital spend increasing to deliver growth
Capital spend increasing to deliver growth Medium term capital forecast to be ~US$11 bn on average with flexibility to adjust spend for value Increasing spend on future-facing commodities to ~70% (US$ bn, nominal) (capital in future-facing commodities, %) 12.5 80 Major capital in future-facing commo
Slide 23: Jansen progress update
Jansen progress update Stage 1 on track – first production target end-CY26; Stage 2 approved – first production expected FY29 Expected investment spend profile1 Stage 1 (US$ billion, nominal) • Jansen S1 US$5.7 bn (C$7.5 bn) project is 38% complete 2.0 1.6 • ~US$3.9 bn in contracts awarded covering
Slide 24: Copper SA: global scale, significant value upside
Copper SA: global scale, significant value upside Working on pathway to significant expansion options with potential for competitive unit costs, strong margins and cashflow Sizeable expected synergies, potential pathway to >500 ktpa26… … building on a number of areas of focus for the future • 100% B
Slide 25: Copper SA: continuing exploration success
Copper SA: continuing exploration success ‘OD Deeps’ has potential to add to Olympic Dam’s already significant underground resource base Representative cross-section showing simplified geology and down hole Cu assays • Drilled ~62 km of exploration holes over 18 months • Drill space ranging from 160
Slide 26: BMA: asset in advantaged position
BMA: asset in advantaged position BMA has several unique operational advantages Reduced number of sites • Large, long-life assets • Bottom half of operational GHG emission intensities for all seaborne met coal operations globally • Two main mining districts – reduced from five prior to BMC sale ‒ Go
Slide 27: Safety and social value indicators
Safety and social value indicators We continue to emphasise the safety culture that must be present every day to eliminate fatalities and serious injuries at BHP Key safety indicators1 H1 FY24 H1 FY23 Target/Goal Fatalities2 0 0 Zero work-related fatalities* High-potential injury (HPI) frequency2 0.
Slide 28: Samarco and Renova Foundation
Samarco and Renova Foundation Samarco plans restart of second concentrator in Q3 FY25. R$34.8 bn spent on reparation and compensation programs Resettlement and environment Compensation / litigation Samarco • ~84% of resettlement cases1 completed across the • Claims processed for ~84%2 of people on •
Slide 29: Continued capital allocation discipline
Continued capital allocation discipline Strong competition for capital as we focus on creating value H1 FY24 Operating Capital productivity productivity Net operating cash flow US$8.9 bn Maintenance and decarbonisation capital US$1.4 bn Strong balance sheet ✓ Minimum 50% payout ratio dividend US$3.4
Slide 30: Return on Capital Employed
Return on Capital Employed ROCE of 26.4% for H1 FY24 ROCE ROCE by asset (%) (%) 55 70 50 60 45 50 40 40 Antamina1 35 30 WAIO Escondida 30 20 BMA Pampa 25 10 Copper Norte South Australia 20 0 15 (10) 10 (20) 5 (30) Western (40) Australia 0 Nickel FY19 FY20 FY21 FY22 FY23 FY24 0 10 20 30 40 50 Average
Slide 31: Balance sheet
Balance sheet Net debt of US$12.6 bn and gearing of 21.7% Movements in net debt Debt maturity profile2 (US$ bn) (US$ bn) 16 8 0.3 12.6 0.6 0.3 6 12 4.0 11.2 4 8 (3.8) 2 4 0 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 - Post 0 FY40 FY41 FY23 Free cash Dividends Dividends 1 Lease Other H1 FY24 US$ Euro St
Slide 32: BHP guidance
BHP guidance Group FY24e Capital and exploration expenditure (US$ bn) ~10.0 Cash basis. Split by category: Maintenance and decarbonisation capital 3.1 Includes non-discretionary spend for deferred development and production stripping; risk reduction, compliance and asset integrity; and decarbonisati
Slide 33: BHP guidance (continued)
BHP guidance (continued) Copper FY24e Medium term Copper production (kt) 1,720 – 1,910 Escondida: 1,080 – 1,180 kt; Spence: 210 – 250 kt; Copper South Australia: 310 – 340 kt; Antamina: 120 – 140 kt (zinc 85 – 105 kt). Escondida Copper production (kt, 100% basis) 1,080 – 1,180 1,200 – 1,300 Medium t
Slide 34: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact1 on H1 FY24 Underlying EBITDA of changes of: US$ m US$1/t on iron ore price2 115 US$1/t on metallurgical coal price 6 US¢1/lb on copper price2 18 US$1/t on energy coal price2,3 7 US¢1/lb on nickel price 0.6 AUD (US¢1/A$) operations4 81 CLP (US¢0
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