Slide 1: Preliminary Results – 30 June 2004
Preliminary Results – 30 June 2004 18 August 2004 Chip Goodyear Chief Executive Officer Chris Lynch Chief Financial Officer
Slide 2: Disclaimer
Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation ha
Slide 3: Preliminary Results – 30 June 2004
Preliminary Results – 30 June 2004 Chip Goodyear Chief Executive Officer
Slide 4: Highlights – year ended 30 June 2004
Highlights – year ended 30 June 2004 • Record EBITDA, up 40% to US$7.5 billion and record EBIT, up 58% to US$5.5 billion. • EBIT up across all CSGs. • Record attributable profit of US$3.5 billion and earnings per share of 56.4 US cents. • Including other efficiency gains, the total merger benefits a
Slide 5: Preliminary Results – 30 June 2004
Preliminary Results – 30 June 2004 Chris Lynch Chief Financial Officer
Slide 6: Results highlights – year ended 30 June
Results highlights –year ended 30 June (US$M) 2004 2003 % Change Turnover(1) 24,943 17,506 +43 EBITDA(1)(2)(3) 7,506 5,363 +40 EBIT(1)(2) 5,488 3,481 +58 Attrib profit (1)(2) 3,510 1,920 +83 Exceptional items (131) (19) Attrib profit (incl exceptionals) 3,379 1,901 +78 Available cash flow (1) 5,235
Slide 7: EBIT by Customer Sector Group
EBIT by Customer Sector Group Year ended 30 June (US$M) 2004 2003 % Change Petroleum 1,391 1,178 +18 Aluminium 776 581 +34 Base Metals 1,156 286 +304 Carbon Steel Materials 1,137 1,045 +9 Diamonds & Spec Products 446 370 +21 Energy Coal 234 198 +18 Stainless Steel Materials 571 150 +281 Exploration
Slide 8: EBIT by Customer Sector Group
EBIT by Customer Sector Group Year ended 30 June 2003 - EBIT US$3,481 million 2004 – EBIT US$5,488 million 10% 4% 4% 25% 5% 8% 31% 7% ` 28% 16% 20% 14% 8% Petroleum 20% Aluminium Base Metals Carbon Steel Material s Diamonds & Spec. Prod. Energy Coal Preliminary Results Stainless Steel Materials Page
Slide 9: EBIT analysis
EBIT analysis Year ended 30 June 04 vs year ended 30 June 03 US$M 7000 3145 (775) 6500 6000 (325) 60 55 (93) (85) (300) 70 75 5488 5500 180 5000 Net price impact Net other impacts 4500 US$1,745 million US$262 million 4000 3481 3500 3000 Year Prices Exchange Price Inflation Volumes Costs Ceased & Ass
Slide 10: Impact of major commodity price changes on EBIT
Impact of major commodity price changes on EBIT Year ended 30 June 04 vs year ended 30 June 03 US$M Copper 800 785 Total price variance + US$3,145 million 700 600 500 Nickel 400 360 Pet Energy 285 Ali coal Chrome 300 260 250 240 Iron ore Silver 220 Lead 200 Zinc Diamonds M ang Others 135 HBI Alumina
Slide 11: Impact of major volume changes on EBIT
Impact of major volume changes on EBIT Year ended 30 June 04 vs year ended 30 June 03 US$M 150 Total volume variance + US$180 million Copper 110 100 Aluminium Iron Ore 65 60 Silver/Lead 50 Mang Zinc/Gold 30 25 Diamonds 15 Coking Coal 10 0 -50 Others (40) -100 Petroleum * (95) Preliminary Results * T
Slide 12: Net interest, taxation & attributable profit
Net interest, taxation & attributable profit Continuing operations, excluding exceptionals Year ended 30 June (US$M) 2004 2003 EBIT 5,488 3,481 Net interest expense (355) (403) Exchange impact on debt (133) (140) Discounting of provisions/Capitalised interest (14) 6 Profit before tax 4,986 2,944 Tax
Slide 13: Impact of restatements of net monetary liabilities
Impact of restatements of net monetary liabilities - Year ended June Impact of Impact of (US$M) June 04 Restatement(1) June 03 Restatement(1) EBIT 5,488 (60) 3,481 (80) Net interest (502) (133) (537) (140) Taxation expense (1,379) (85) (984) (160) Attributable profit 3,510 (278) 1,920 (380) US$3,788
Slide 14: Exceptional items (after tax)
Exceptional items (after tax) – year ended 30 June (US$M) 2004 Closure plans (512) Petroleum litigation settlement 48 Australian tax consolidation regime 95 US and Canadian tax deductions recognised 238 Total exceptional items (131) Preliminary Results Page 14 18 August 2004
Slide 15: Exceptional items (after tax) – Closure plans
Exceptional items (after tax) – Closure plans (US$M) 2004 Southwest Copper Capital works (eg. earthworks & demolition) (160) Other adjustments 130 Ongoing costs (eg. water management & site maintenance) (255) Risked costs (140) Total Southwest Copper (425) Other closed sites (87) Total closure plans
Slide 16: Cash flow – from continuing operations
Cash flow – from continuing operations Year ended 30 June (US$M) 2004 2003 Operating cash flow and JV dividends 6,904 4,996 Net interest paid (332) (398) Tax paid (1,337) (1,002) Available cash flow 5,235 3,596 Capital expenditure (2,624) (2,666) Exploration expenditure (454) (348) Sale of fixed ass
Slide 17: Cost savings – progress to June 2004
Cost savings – progress to 30 June 2004 (US$M) FY 02 FY 03 FY 04 Total Cost related merger benefits 160 40 - 200 Non cost related merger benefits 60 25 - 85 Total merger benefits 220 65 - 285 Cost savings and efficiency gains Operating Excellence 200 165 365 Strategic sourcing 40 26 66 Portfolio mix
Slide 18: Preliminary Results – 30 June 2004
Preliminary Results – 30 June 2004 Chip Goodyear Chief Executive Officer
Slide 19: The strategic framework value drivers
The strategic framework value drivers I. Outstanding Assets II. Growth From Deep Inventory of Projects III. Customer-Centric Marketing IV. The Portfolio Effect V. The Petroleum CSG VI. Innovation VII. People Preliminary Results Page 19 18 August 2004
Slide 20: Outstanding assets
Outstanding assets Higher EBIT contribution from all CSG’s Iron Ore Manganese Ore Aluminium Alumina Diamonds Silver Nickel Natural Gas Preliminary Results Page 20 18 August 2004
Slide 21: Outstanding assets: increasing margins and return on capital
Outstanding assets Increasing margins and return on capital Return on Capital EBIT margin 35% 29.8% 30% 24.3% 25% 21.4% 20.3% 20% 15% 13.4% 10.9% 10% 5% 0% 2002 2003 2004 Preliminary Results EBIT margins exclude exceptional items and third party products, refer to slide 54 for more details. Page 21
Slide 22: EBIT margin growth by Customer Sector Group
Outstanding assets EBIT margin growth by Customer Sector Group 2003 2004 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Petroleum Aluminium Base Carbon Diamonds Energy Stainless Metals Steel & Specialty Coal Steel Materials Products Materials Preliminary Results Page 22 18 August 2004 EBIT margins exclude ex
Slide 23: Growth projects delivered since July 2001
Growth projects delivered since July 2001 Ekati * Zamzama Mt PACE Arthur Ohanet North Typhoon Aluminium San Juan Base M etals Cerrejon * Carbon Steel Energy Coal Mozal II Diamonds Antamina Area C Petroleum Tintaya Oxide Hillside III Escondida IV Bream Gas Accelerated Pipeline expansion 17 projects O
Slide 24: Volume growth
Volume growth Year ended 30 June 2001 to year ended 30 June 2004 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Natural Gas Aluminium Alumina Copper Silver Iron Ore Manganese Nickel Ferrochrome Ore Preliminary Results Page 24 18 August 2004
Slide 25: EBIT growth since the merger
EBIT growth since the merger US$bn 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 H1 H2 H1 H2 H1 H2 FY2002 FY2003 FY2004 Preliminary Results Page 25 18 August 2004
Slide 26: Deep inventory of growth projects
Deep inventory of growth projects BROW NFIELD Broadmeadow Yabulu Yabulu Klipspruit GoM Infrastr. Panda UG Escondida Alumar Blackw ater CPR Dendrobium CPP WAIO RGP Esc’da Esc’da Sulphide Sulphide WA WA Iron Iron Ore Ore Worsley Long Long Term Term Expansion Expansion NWS NWS Esc’da Esc’da Paranam Nor
Slide 27: Customer centric marketing - a competitive advantage
Customer centric marketing - a competitive advantage • Better meet the needs of our customers – Technical and product expertise – Cross selling product • Improve market share and customer base – Utilize asset capacity – Build broader relationships • Understand and reduce risk – Freight risk – Operat
Slide 28: Petroleum – continued success through FY2004
Petroleum – continued success through FY2004 • Gulf of Mexico • Mad Dog, Atlantis (and infrastructure) developments on track • Appraisal success at Shenzi and Neptune • Puma discovery • Strengthened acreage position • Western Australia drilling success • Exmouth Sub Basin (Stybarrow, Ravensworth, Cr
Slide 29: The strategic framework value drivers
The strategic framework value drivers I. Outstanding Assets II. Growth From Deep Inventory of Projects III. Customer-Centric Marketing IV. The Portfolio Effect V. The Petroleum CSG VI. Innovation VII. People Preliminary Results Page 29 18 August 2004
Slide 30: China – driving global raw materials growth
China – driving global raw materials growth • Chinese growth is not a short-term phenomenon • Growth has strong long-term structural underpinnings • Chinese government is clearly committed to reform, infrastructure provisions and economic growth • “Over-heating” has been confined to certain parts of
Slide 31: China – growth translates to opportunity for BHP Billiton
China – growth translates to opportunity for BHP Billiton • Sales into China increasing but diversification remains • Currently 9.8% of total company revenues, up from 6.9% in FY03 US$M ROW Nth Am 1,357 12 1400 Europe 1200 Aust ` * * 10 1,075 1000 Oth Asia * 8 % of total sales China Japan 785 800 6
Slide 32: Outlook
Outlook • China – Growth rates expected to ease modestly – Will remain a large and sustainable consumer of raw materials and resources in coming years – But will be subject to ‘ups and downs’ • Asia – Benefiting from China • Japan – Strongest momentum in a decade • USA – Recovery continuing • Europe
Slide 33: Summary
Summary • HSEC improvement critical to long term success • Record production and profit performance • Continued strong demand from China • Fundamental strategy remains unchanged – Maximising performance of operating assets – Pursuit of cost savings and efficiency gains – Establish systems and proces
Slide 34: Ohpobilliton
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Slide 35: Strategic focus
Strategic focus M&A Bolt-on Acq. Growth Pipeline Savings and Efficiencies Low Cost, High Quality Assets Preliminary Results Page 35 18 August 2004
Slide 36: Strategic framework scorecard
Strategic framework scorecard Value Driver Strategic imperatives Performance measures FY04 performance I. Outstanding assets Zero harm Improve HSEC statistics Classified Injury Frequency Rate improved by 8% Work related illness down by 13% Generation of hazardous waste down by 12% Community – 1% of
Slide 37: Strategic framework scorecard
Strategic framework scorecard Value Driver Strategic imperatives Performance measures FY04 performance V. The Petroleum Value adding growth Low discovery costs Puma discovery and appraisal of Shenzi and CSG Growing reserves and Neptune in the Gulf of M exico production Stybarrow and Pyrenees explora
Slide 38: Sanctioned development projects – Minerals
Sanctioned development projects – update Minerals (US$2.9 billion) Project Commodity Share of Initial Share of production capacity Progress Capex production US$M target date Paranam refinery expansion Increase capacity to 2.2 Alumina 29 Q3 CY05 Ahead of schedule (Suriname) – 45% million tpa (100%) W
Slide 39: Sanctioned development projects – Petroleum
Sanctioned development projects - update Petroleum (US$2.4 billion) Project Commodity Share of Initial Share of production Progress Capex production capacity US$M target date Behind original ROD (Algeria) – 36% Oil/gas 192 Q4 CY04 28,800 boe/day schedule of Q1 CY04 M ad Dog (US) – 23.9% Oil/gas 335
Slide 40: Development projects in feasibility – Minerals
Development projects in feasibility Minerals (US$3.2 billion) Project Commodity Estimated Forecast initial Project description Share of production* Capex* US$M Spence (Chile) – 100% Copper 967 Late 2006 200,000 tonnes per annum Escondida Course Particle Copper 100 Q3 2006 54,000 tpa (100%) Recovery
Slide 41: Development projects commissioned since merger
Development projects commissioned since merger Project Our share of capex Initial production date Budget Actual Budget Actual M ozal 2 (M ozambique) – 47.1% 405 311 Q4 2003 Q2 2003 Zamzama (Pakistan) – 38.5% 40 40 Q3 2003 Q2 2003 Bream Gas Pipeline (Australia) – 50% 50 34 Q2 2003 Q4 2002 Escondida P
Slide 42: Development projects commissioned since merger cont.
Development projects commissioned since merger cont. Project Our share of capex Initial production date Budget Actual Budget Actual Products & Capacity Expansion (Australia) – 299 270 (1) Q2 2004 Q1 2004 85% Area C (Australia) – 85% 181 171 Q4 2003 Q3 2003 M t Arthur North (Australia) – 100% 411 411
Slide 43: The portfolio effect - steady increases in EBITDA
The portfolio effect - steady increases in EBITDA(1) US$ bn September 11 Enron SA Rand A$ BEE Charter Iraq war SARS Recovering World Trade Bankruptcy strengthen leak global Centre Attack economy 4.4 4.0 3.6 3.2 2.8 2.4 2.0 1.6 1.2 0.8 0.4 0.0 H1 H2 H1 H2 H1 H2 FY2002 FY2003 FY2004 Preliminary Result
Slide 44: The portfolio effect - financial strength
The portfolio effect - financial strength 8.0 22 EBITDA Interest Coverage Ratio (times) 20 7.0 18 16 US$ billion debt 6.0 14 Average borrowing cost (%) 12 5.0 10 4.0 8 6 3.0 4 2001 2002 2003 2004 Moody’s Positive Investment A3 A2 Watch Services Standard & A- Poor’s A+ Average borrowing cost = gross
Slide 45: Capital expenditure
Capital expenditure 2004 2005 (US$M) Actual Forecast Project expenditure 1,698 2,350 Sustaining capital 926 1,200 Exploration expenditure (1) 454 450 Total 3,078 4,000 Preliminary Results (1) 2005 forecast made up of US$300 million Petroleum exploration and Page 45 18 August 2004 US$150 million M in
Slide 46: Petroleum - reserves trends
Petroleum - reserves trends (1) 2500 30 2000 25 Proved R/P Ratio 20 Million boe 1500 15 1000 10 500 5 0 0 2000 2001 2002 2003 2004 Proved Probable Proved R/P* (1) Preliminary Results Net revenue interest * Proved R/P ratio refers to Production over Reserves Page 46 18 August 2004
Slide 47: Petroleum: Gulf of Mexico - Leaseholding
Petroleum Gulf of Mexico - Leaseholding West WestCameron Cameron Green GreenCanyon Canyon 1860 1860 Licence Vortex Vortex Producing Genesis Genesis Discovery Neptune Neptune Development Shenzi Shenzi Typhoon Typhoon//Boris Boris Atlantis Atlantis Puma Puma Mad MadDog Dog >90 Blocks acquired Cascade
Slide 48: Petroleum: Exmouth sub-basin exploration/appraisal wells
Petroleum Exmouth sub-basin exploration/appraisal wells (Apr–Aug 04) WA-255-P(1) STYBARROW-3/-4 KNOTT-1 ESKDALE-2 WA-255-P(2) RAVENSWORTH-2 CROSBY-2 STICKLE-2/-3 Stybarrow Enfield HARRISON-1 WA-155-P(1) Gas STICKLE-1 WA-155-P(1) Oil Ravensworth Crosby Onslow Retentio n Lease WA-12-R 25km Exploratio
Slide 49: Strategic framework US$500M cost reduction target
Strategic framework US$500M cost reduction target Methodology principles • Commodity based – unit costs • FY01 base year – consistent with merger synergies • Adjusted for price linked costs, exchange rates, inflation and exceptionals Cost savings and efficiency gains result from: – Operating excelle
Slide 50: USD functional currency policy - general level of exposure
USD functional currency policy - general level of exposure (US$M) AUD Rand Impact Net payables, receivables & (500) (150) EBIT employee provisions Resource Rent Tax provision (300) - EBIT Tax provisions (400) (400) Tax Debt - (400) Interest Total (1,200) (950) P&L Restoration & Rehab (1,000) (300) B
Slide 51: Key net profit sensitivities
Key net profit sensitivities Approximate im pact on FY05 net profit after tax of changes of: (US$M) US$1/t on iron ore price 60 US$1/bbl on oil price 40 US$1/t on metallurgical coal price 25 USc1/lb on aluminium price 20 USc1/lb on copper price 15 US$1/t on energy coal price 20 USc1/lb on nickel pri
Slide 52: Key net profit sensitivities
Key net profit sensitivities Approximate im pact on FY05 net profit after tax of changes of: (US$M) Australian dollar (USc1/A$) Operations(1) 35 Net monetary liabilities(2) 15 South African Rand (0.2 Rand/US$) Operations(1) 35 Net monetary liabilities(2) 15 Rand debt(2) 10 (1) Impact based on averag
Slide 53: Preliminary results under Australian GAAP
Preliminary results under Australian GAAP Year ended 30 June (US$M) 2004 2003 Sales revenue 22,887 15,608 Profit before tax 4,369 2,783 Profit after tax attributable to members 3,403 1,860 EPS (US cents) 54.7 30.0 Preliminary Results Page 53 18 August 2004
Slide 54: Non GAAP measures used within this presentation
Non GAAP measures used within this presentation EBITD A EBITD A is earnings before in terest and tax, from contin uin g operatio ns (except 2001 which includes Steel), before deprecia tion, amortisation and impairments of Group companies and jo int ventures and associa tes, as detaile d belo w. We b
Slide 55: Non GAAP measures used within this presentation
Non GAAP measures used within this presentation EBIT margin by Customer Sector Group exclu din g third party product activities Slide 22 refers to Customer Sector Group EBIT margins, excluding third party product activities, as detaile d belo w. We believe that this provides useful information but s
Slide 56: Ohpobilliton
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