Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (June 2008)
40 slides from Bhp's merger presentation, Jun 11, 2008
Slide 1: BHP Billiton – Strength, Stability and Growth
Citi Smith Barney - Special Company Presentation Alex Vanselow, Chief Financial Officer Karen Wood, Chief People Officer June 2008 BHP Billiton – Strength, Stability and Growth
Slide 2: Disclaimer
Disclaimer This document has been prepared by BHP Billiton Limited and BHP Billiton Plc (“BHP Billiton") and comprises the written materials/slides for a presentation concerning BHP Billiton's offers for Rio Tinto Limited and Rio Tinto plc (“Rio Tinto”). By reviewing/attending this presentation you
Slide 3: Disclaimer (continued)
Disclaimer (continued) No statements concerning expected cost savings, revenue benefits (and resulting incremental EBITDA) and EPS accretion in this presentation should be interpreted to mean that the future earnings per share of the enlarged BHP Billiton group for current and future financial years
Slide 4: BHP Billiton: Strength, Stability and Growth
BHP Billiton: Strength, Stability and Growth • Today: The world’s leading diversified mining company • Our past: A proven track record • Our future: The outlook is exciting • The offer for Rio Tinto
Slide 5: Today: The world's leading diversified mining company
Today: The world’s leading diversified mining company
Slide 6: With a global portfolio diversified by geography and commodity
With a global portfolio diversified by geography and commodity… Stainless Steel Materials #3 global nickel producer Iron Ore #3 global supplier of seaborne iron ore Manganese #1 global supplier of seaborne manganese ore Metallurgical Coal #1 global supplier of seaborne traded metallurgical coal Base
Slide 7: Creating the world's largest diversified natural resources company
Creating the world’s largest diversified natural resources company Sources: Bloomberg, Datastream. a) Rio Tinto undisturbed market cap as at 31-Oct-2007. Top 10 metals and mining companies (Market capitalisation as at 30-May-2008, US$bn) Vale Rio Tinto (a) Anglo American Xstrata Norilsk Nickel Freep
Slide 8: To deliver our strategy at scale we need a simple, accountable organisation
To deliver our strategy at scale we need a simple, accountable organisation Corporate Centre (Board and GMC) Business Units (Customer Sector Groups) • Corporate centre focuses on the strategic direction of the company and minimising corporate risks • Ensures delivery of key directives including Zero
Slide 9: …led by an experienced management team
…led by an experienced management team Chairman and Chief Executive Officer Group Management Committee Notes: a) Andrew Mackenzie’s appointment to BHP Billiton was announced on 20-Nov-2007, he has not yet commenced his new role at BHP Billiton. He previously worked at Rio Tinto where he was Chief Ex
Slide 10: …maintaining our commitment to our core strategy
…maintaining our commitment to our core strategy • Focus on Tier 1 assets that are large, low-cost and expandable • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows • Maintenance of a deep diversi
Slide 11: With an overriding commitment to ethics, safety, environmental practice and community engagement
With an overriding commitment to ethics, safety, environmental practice and community engagement • Sustainable development is fundamental to our success • Our licence to operate depends on responsibly operating our business: – A track record of being valued by our communities will contribute to us b
Slide 12: Our past: A proven track record
Our past: A proven track record
Slide 13: Our business today…a unique diversified portfolio balanced across high margin commodities
Our business today…a unique diversified portfolio balanced across high margin commodities Underlying EBITDA (CY2007, 12 months, US$bn) Underlying EBITDA Margin (a) (CY2007, 12 months) Note: Historical financial information has been restated for comparative purposes per note 1 of BHP Billiton’s half-
Slide 14: A track record of investing early to meet demand…
A track record of investing early to meet demand… Completed projects (US$bn) Source: BHP Billiton and Rio Tinto annual and half-yearly reports. Note: Total represents capital expenditure on completed projects. 1.0 2.1 3.9 13.1 14.6 16.0 22.7 7.2 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008YTD Hi
Slide 15: Most developments have been executed to expectations
Most developments have been executed to expectations, wherever on the globe they are located Notes: a) Selected projects >US$100m and managed by BHP Billiton. Excludes petroleum projects. Performance relative to initial announced US$ budget. b) BHP Billiton provided the latest update for the status
Slide 16: Delivering superior EPS growth for shareholders…
Delivering superior EPS growth for shareholders… Earnings per share (US$ per share) Note: BHP Billiton’s EPS represents reported underlying EPS for the financial year ending 30-June. EPS in FY2002 excludes the results of BHP Billiton’s Steel business which was demerged in July 2002. US$ 0.31 US$ 0.3
Slide 17: …and dividend growth, with consecutive ordinary dividend increases
… and dividend growth, with 12 consecutive ordinary dividend increases 6.5 7.0 16.5 13.5 17.5 20.0 Ordinary dividends per share (US cents per share) Note: Two interim dividends were paid in FY2004 45% increase in interim dividend 13.0 14.5 26.0 28.0 36.0 47.0 29.0 FY2002 FY2003 FY2004 FY2005 FY2006
Slide 18: Creating considerable wealth for our shareholders
Value at 28 June 2001 A$10,372 Value at 30 June 2003 A$9,098 Value at 30 June 2005 A$19,848 Value at 30 June 2007 A$39,727 Creating considerable wealth for our shareholders 10,000 20,000 30,000 40,000 50,000 60,000 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 J
Slide 19: Our future: The outlook is exciting
Our future: The outlook is exciting
Slide 20: Chinese growth is driving global materials demand
Chinese growth is driving global materials demand China USA Other Notes: Seaborne iron ore demand based on import statistics - CRU data for 2007, IISI data for 1997. Energy consumption is all uses of coal, gas, oil and nuclear, expressed as millions tonnes of oil equivalent, data not yet available.
Slide 21: ...and industrialisation and urbanisation in China appears to have a long way to go
...and industrialisation and urbanisation in China appears to have a long way to go 1,000 1,200 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP/Capita (Jan 2008 Constant US Dollars) China Germany India Japan Korea, Rep. United States Taiwan Finished steel consumption (kg/cap
Slide 22: Sales to China currently represents 20% of BHP Billiton's revenue
Sales to China currently represents 20% of BHP Billiton’s revenue 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 FY02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08 Base Metals Iron Ore SSM Other BHP Billiton revenue from China (US$m) 1,075 1,357 1,588 Europe Japan Ot
Slide 23: India – the journey has begun
India – the journey has begun GDP (US$ billion) BHP Billiton copper equivalent sales volume units (a) (100=FY2002 sales to China) FY 2002 FY 2007 China India 1,000 China India Equity Basis 100% Basis Source: World Bank, Focus Economics, BHP Billiton. a) Note: Converted to copper equivalent units usi
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Slide 27: BHP Billiton has a deep diversified inventory of growth options
BHP Billiton has a deep diversified inventory of growth options, many of which are brownfield expansions Boffa/Santou Refinery As at 2 May 2008 Proposed capital expenditure <$500m $501m-$2bn $2bn+ SSM Energy Coal D&SP Iron Ore Base Metals Petroleum Met Coal CSG Manganese Aluminium Execution Pyrenees
Slide 28: With full exposure to steel demand growth
With full exposure to steel demand growth…. Manganese (b) Iron Ore (c) Metallurgical Coal (a) JFY2003 JFY2004 JFY2005 JFY2006 JFY2007 JFY2008 • BHP Billiton has leading global positions in the three core raw materials for steel production – #1 global supplier of seaborne traded metallurgical coal –
Slide 29: The offer for Rio Tinto
The offer for Rio Tinto
Slide 30: Overlapping mineral basin positions. US$3.7bn per annum of synergies
Overlapping mineral basin positions. US$3.7bn per annum of synergies Selected existing BHP Billiton and Rio Tinto assets, projects and concessions.
Slide 31: Summary of the offer for Rio Tinto
Summary of the offer for Rio Tinto • BHP Billiton has made a pre-conditional offer for Rio Tinto, it will be capable of acceptance by shareholders following regulatory approvals and posting of offer documents • The offer is being made direct to the shareholders of Rio Tinto • Rio Tinto shareholders
Slide 32: BHP Billiton and Rio Tinto's share prices have been strongly correlated
BHP Billiton and Rio Tinto’s share prices have been strongly correlated, with BHP Billiton outperforming BHP Billiton Ltd and Rio Tinto Ltd TSR (a) (Index: Jun-2001 = 100) BHP Billiton Ltd vs Rio Tinto Ltd relative performance (b) (Price performance relative to Jun-2001 = 100) Source: IRESS. a) For
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Slide 34: Conclusion – Strength, stability and growth
Conclusion – Strength, stability and growth • BHP Billiton on a standalone basis has a bright future • The core strategy remains unchanged • Focused on producing volumes from low cost assets • A combination of BHP Billiton and Rio Tinto can generate substantial additional value for shareholders – we
Slide 35: bhpbilliton resourcing the future
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Slide 36: bhpbilliton resourcing the future
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Slide 37: Appendix: Alex Vanselow Profile
Appendix: Alex Vanselow Profile Alex Vanselow – Group Executive and Chief Financial Officer Age: Professional qualifications: BComm, Wharton AMP Previous BHP Billiton positions: Alex Vanselow joined the Group in 1989 and was appointed President Aluminium in March 2004 and appointed Chief Financial O
Slide 38: Appendix: Karen Wood Profile
Appendix: Karen Wood Profile Karen Wood – Group Executive and Chief People Officer • General Counsel and Company Secretary, Bonlac Foods Other work experience: Age: Professional qualifications: • B Law (Hons), Monash University • BEd , Melbourne State College Previous BHP Billiton positions: • Chief
Slide 39: Appendix: Marius Kloppers Profile
Appendix: Marius Kloppers Profile Marius Kloppers – Chief Executive Officer Age: Professional qualifications: • BE (Chem), MBA, PhD (Materials Science) • Bachelor of Chemical Engineering (University of Pretoria (South Africa)) • PhD from Massachusetts Institute of Technology (MIT) (USA) • MBA from I
Slide 40: bhpbilliton resourcing the future
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