Bhp Group Ltd · ASX:BHP
Bhp — H1 FY20 Earnings Presentation
39 slides from Bhp's earnings presentation, Feb 18, 2020
Slide 1: Results presentation for half year ended 31 December 2019
18 February 2020 For personal use only To: Australian Securities Exchange New York Stock Exchange RESULTS PRESENTATION FOR HALF YEAR ENDED 31 DECEMBER 2019 Attached are the presentation slides for a presentation by the Chief Executive Officer and Chief Financial Officer. A video of this presentation
Slide 2: Financial results Half year ended December 2019
For personal use only Financial results Half year ended 31 December 2019 Western Australia Iron Ore
Slide 3: Disclaimer
Disclaimer For personal use only Forward-looking statements This presentation contains forward-looking statements, including statements regarding: trends in commodity prices and currency exchange rates; demand for commodities; plans, strategies and objectives of management; closure or divestment of
Slide 4: Financial results Half year ended December 2019
For personal use only Financial results Half year ended 31 December 2019 Mike Henry Chief Executive Officer Spence
Slide 5: Exceptional performance in a dynamic world
Exceptional performance in a dynamic world BHP aims to be the sector’s best operator and reliably deliver leading financial returns and social value For personal use only Maintain Levers Social value Capital discipline Future Culture Safe Simple portfolio fit Capability Value and Asset-centric focus
Slide 6: H1 FY20 financial highlights
H1 FY20 financial highlights Solid operational performance and strong earnings For personal use only Profitability Margin Free cash flow US$ 12.1 bn 56% US$ 3.7 bn Underlying EBITDA up 15% Underlying EBITDA margin free cash flow Net debt Shareholder returns ROCE US$ 12.8 bn 65 US cps 19% net debt pa
Slide 7: H1 FY20 operational highlights
H1 FY20 operational highlights We will continue to improve safety and performance at our operations For personal use only Safety Production Unit costs On track Zero fatalities Volumes stable to full year guidance TRIF ↓2%; On track to full year guidance H1 FY20: WAIO ↓10%; Escondida ↓6% High Potenti
Slide 8: Financial results Half year ended December 2019
For personal use only Financial results Half year ended 31 December 2019 Peter Beaven Chief Financial Officer Trinidad and Tobago
Slide 9: Financial performance
Financial performance EBITDA margin 56% and strong earnings growth For personal use only Summary income statement Strong earnings delivery H1 FY20 % change (US cent per share) (Index, FY16=100) (US$ billion) 200 200 Underlying EBITDA 12.1 15% Underlying EBITDA margin 56% Underlying EBIT 9.0 21% 1
Slide 10: Group EBITDA waterfall
Group EBITDA waterfall Solid underlying performance across the portfolio For personal use only Underlying EBITDA variance (US$ billion) 15 External US$2.0 billion Controllable US$(0.4) billion 0.3 0.4 12.5 0.1 0.0 1.5 12.1 (0.2) (0.1) (0.3) (0.1) 10.5 10 H1 FY20 volume variance by business (US$bn) 0
Slide 11: Segment performance
Segment performance Prices and solid operational performance offset H1 planned maintenance For personal use only Iron Ore8 Copper Metallurgical Coal Petroleum10 Continued unit cost Record throughput Solid underlying Delivering reduction at Escondida performance strong margins % of Group EBITDA7 60%
Slide 12: Cash generation
Cash generation Stable operating performance, and solid free cash flow generation For personal use only Net operating cash flow Free cash flow (US$ billion) (Index, FY10=100) (US$ billion) (Index, FY10=100) 35 200 25 200 H1 FY20 movements in working capital (US$ billion) 30 1.0 0.8 20 200 (0.4) 0.0
Slide 13: Capital allocation
Capital allocation Disciplined adherence to our Capital Allocation Framework For personal use only H1 FY20 Operating Capital productivity productivity Net operating cash flow US$7.4 bn Maintenance capital US$1.0 bn Strong balance sheet Minimum 50% payout ratio dividend11 US$2.7 bn Excess cash US$3
Slide 14: Maximise value and returns
Maximise value and returns Net debt US$12.8 billion at lower end of the range; since 2016 ~US$31 billion reinvested; ~US$33 billion returned to shareholders13 For personal use only Net debt at lower end of target range Disciplined investment Returns to shareholders (Net debt, US$ billion) (Capital a
Slide 15: Return on Capital Employed
Return on Capital Employed H1 FY20 ROCE 19%; plans to improve ROCE at every asset For personal use only ROCE by asset Returns (%) (ROCE excluding Onshore US, %) 50 30 Excludes investment in 20 major projects in execution 25 Antamina14 15 20 15 10 WAIO15 10 Escondida Petroleum Ex-Exploration Queensla
Slide 16: Financial results Half year ended December 2019
For personal use only Financial results Half year ended 31 December 2019 Mike Henry Chief Executive Officer BMA
Slide 17: We have a strong foundation
We have a strong foundation World class assets across the best commodities, underpinned by the Capital Allocation Framework For personal use only Iron Ore Copper Metallurgical Coal Petroleum • Low cost iron ore producer • Top 3 copper producer with • Largest seaborne supplier of • Consistent high ma
Slide 18: Asset performance: WAIO and Queensland Coal
Asset performance Building momentum to further unlock value; South Flank on track to CY21 first production For personal use only WAIO Queensland Coal Improving supply chain reliability Improving cost performance • Car Dumper 2 major overhaul as part of port stabilisation program • Extensive planned
Slide 19: Asset performance: Escondida and Pampa Norte
Asset performance Continuous improvement in maintenance and operating performance; throughput records at Escondida For personal use only Escondida Pampa Norte Strong operating performance Continuous improvement in maintenance and operating performance • Record concentrator throughput of 367 ktpd at
Slide 20: Asset performance: Petroleum
Asset performance A strong base combined with high-return projects and exploration growth opportunities For personal use only Petroleum Petroleum exploration High-return options within current portfolio to offset field decline Exploration and appraisal program continues progressing well • Scarboroug
Slide 21: Investment proposition
Investment proposition We have the assets, options, capabilities and discipline to sustainably grow long-term shareholder value and returns For personal use only Maximise cash flow Capital discipline Value and returns Net debt Low-cost producer targeting lower end 18% ROCE efficiency, technology, cu
Slide 22: Exceptional performance in a dynamic world
Exceptional performance in a dynamic world BHP aims to be the sector’s best operator and reliably deliver leading financial returns and social value For personal use only Maintain Levers Social value Capital discipline Culture Future Safe Simple portfolio fit Capability Value and Asset-centric focus
Slide 23: For personal use only
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Slide 24: Appendix
For personal use only Appendix
Slide 25: Safety and sustainability
Safety and sustainability We transparently track our performance on our social value commitments and we are making good progress For personal use only Category Key indicators H1 FY20 H2 FY19 H1 FY19 FY19 Target Fatalities1 0 0 1 1 Zero work-related fatalities High Potential Injury (HPI) rate Safety
Slide 26: Samarco and Renova Foundation
Samarco and Renova Foundation Resettlement remains a priority social program For personal use only Rehabilitation Compensation Samarco restart (Renova Foundation) (Renova Foundation) Communities • BRL$2.3 billion indemnification and • Received LOC (Corrective Operating financial aid paid to December
Slide 27: Market outlook
Market outlook Near-term uncertainty, attractive medium-term fundamentals, long run strategic themes For personal use only Short term Medium term Long term Growth in Policy Demand Steeper Electrification New supply population, uncertainty uncertainty cost curves of transport wealth Sentiment Prudent
Slide 28: Working capital and balance sheet
Working capital and balance sheet Net debt of US$12.8 billion and gearing of 19.7% For personal use only Movements in working capital Debt maturity profile3 (US$ billion) (US$ billion) Price impact on 1.0 0.8 receivables and Includes employee provision 8 movements, timing of operational royalties pa
Slide 29: Net debt: definition and IFRS
Net debt: definition and IFRS 16 Operating lease commitments brought onto balance sheet from 1 July 2019 For personal use only • Net debt target range US$12-17 bn – change in net debt definition to include fair value of debt-related derivatives at 30 June 2019 (US$0.2 bn increase), unrelated to IFRS
Slide 30: IFRS leases: H1 impacts
IFRS 16 leases: H1 impacts Accounting change only; no impact to net cash flows For personal use only Balance sheet1 Income statement Cash flow statement Disclosures Financial metrics Right of use assets Operating lease Operating costs Operating cash outflow Net debt (PP&E) commitments (IAS 17) US$0.
Slide 31: IFRS leases: H1 impacts
IFRS 16 leases: H1 impacts Accounting changes only, no impact to net cash flows For personal use only Balance sheet Income statement Unit cost Lease liabilities Depreciation1 EBITDA1 No change to unit Group US$1.9 bn US$0.3 bn US$0.4 bn cost guidance WAIO2 US$0.17 bn US$0.02 bn US$0.03 bn 2% Queensl
Slide 32: Projects in feasibility
Projects in feasibility For personal use only Autonomous truck hauling Jansen Stage 1 Scarborough Australia Saskatchewan, Canada Australia Automating up to ~500 haul trucks across Western Australia 13 subsea wells tied back to a semisubmersible FPU2; dry Iron Ore and Queensland Coal sites Shaft equi
Slide 33: BHP guidance
BHP guidance For personal use only Group FY20e FY21e Capital and exploration expenditure (US$bn) <8.0 ~8.0 Cash basis. Including: Maintenance 2.1 Includes non-discretionary capital expenditure to maintain asset integrity, reduce risks and meet compliance requirements. Also includes capitalised defer
Slide 34: BHP guidance (continued)
BHP guidance (continued) For personal use only Copper FY20e Medium term Copper production (kt) 1,705 – 1,820 Escondida: 1.16 – 1.23 Mt; Olympic Dam: 180 – 205 kt; Pampa Norte 230 – 250 kt; Antamina: 135 kt (zinc 110kt). Capital and exploration expenditure (US$bn) 2.6 Includes ~US$60 million explorat
Slide 35: BHP guidance (continued)
BHP guidance (continued) For personal use only Coal FY20e Medium term Metallurgical coal production (Mt) 41 – 45 49 – 54 Planned wash plant shutdowns in Sept Q19 at Goonyella, Peak Downs and Caval Ridge Energy coal production (Mt) 24 – 26 NSWEC: 15 – 17 Mt; Cerrejón: ~9 Mt. Capital and exploration e
Slide 36: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities For personal use only Approximate impact1 on FY20 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price2 233 US$1/bbl on oil price3 38 US$1/t on metallurgical coal price 39 US¢1/lb on copper price2 36 US$1/t on energy coal price2 16 US¢1/lb on nick
Slide 37: Statement of petroleum resources
Statement of petroleum resources For personal use only The estimates of Petroleum Reserves and Contingent Resources contained in this presentation are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr. A. G. Gadgil, who is employed by BHP.
Slide 38: Footnotes
Footnotes 1. Slide 6: High Potential Injury frequency: number of injuries from events where there was the potential for a fatality per million hours worked, presented on a total operations basis. 2. Slide 8: Adjusted effective tax rate and Adjusted effective tax rate incl. royalties: excludes the in
Slide 39: For personal use only
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