Bhp Group Ltd · ASX:BHP
Bhp — FY2019 Earnings Presentation
39 slides from Bhp's earnings presentation, Aug 20, 2019
Slide 1: Financial results Year ended 30 June 2019
Financial results Year ended 30 June 2019 Escondida
Slide 2: Disclaimer
Disclaimer 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 certain operations or
Slide 3: Financial results Year ended 30 June 2019
Financial results Year ended 30 June 2019 Onshore US assets have been presented as discontinued operations. Andrew Mackenzie Chief Executive Officer Neptune
Slide 4: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capabilities and discipline to sustainably grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$12-17 bn net debt ROCE to ~20% efficiency, technology, culture range updated
Slide 5: FY19 financial scorecard
FY19 financial scorecard >US$17 billion returned to shareholders over the last 12 months Volumes Profitability Free cash flow Cu Eq broadly flat US$ 23.2 bn US$ 10.0 bn Underlying EBITDA and 53% margin free cash flow 2% decline despite weather, grade and field decline and production outages diversif
Slide 6: Sustainability is one of our core values
Sustainability is one of our core values We will continue our work to improve safety at our operations Safety Health Climate change Community Samarco • Tragically, we had a • Continued uptake of • Plans to update • Building strong • Committed to support fatality at Saraji resilience program scenario
Slide 7: Financial results Year ended 30 June 2019
Financial results Year ended 30 June 2019 Onshore US assets have been presented as discontinued operations. Peter Beaven Chief Financial Officer Western Australia Iron Ore
Slide 8: Financial performance
Financial performance Strong free cash flow generation and EBITDA margin above 50% Summary FY19 Income statement Strong earnings delivery (US$ billion) (US cent per share) (Index, FY16=100) 200 200 Total operations (including Onshore US) Underlying attributable profit 9.1 Net exceptional items (0.8)
Slide 9: Group EBITDA waterfall
Group EBITDA waterfall Strong H2 EBITDA performance offsetting unplanned outages in H1 Underlying EBITDA variance (US$ billion) 30 External US$1.8 billion Controllable US$(1.8) billion 1.2 1.0 25.0 0.1 0.1 25 23.2 (0.4) (0.1) 23.2 (1.0) (0.2) (0.7) 20 FY19 productivity performance: US$(1) billion5 1
Slide 10: Segment performance
Segment performance Prices and strong operational performance in H2 underpin EBITDA Iron Ore11 Copper Coal Petroleum12 290 Mtpa run rate achieved in Record throughput Record stripping Strong field and uptime the June quarter14 at Chilean operations performance performance % of Group EBITDA10 48% 19%
Slide 11: Cash generation
Cash generation Our diversified portfolio has delivered consistently strong cash flows Operating cash flow Free cash flow (US$ billion) (Index, FY10=100) (US$ billion) (Index, FY10=100) 35 200 25 200 30 20 200 25 15 100 20 10 100 15 5 0 10 0 200 5 (5) 0 0 (10) (100) FY10 FY11 FY12 FY13 FY14 FY15 FY1
Slide 12: Capital allocation
Capital allocation Disciplined adherence to our Capital Allocation Framework FY19 Operating Capital productivity productivity Net operating cash flow US$17.9 bn Maintenance capital US$2.0 bn Strong balance sheet Minimum 50% payout ratio dividend15 US$4.4 bn Excess cash US$10.2bn Excludes net cash
Slide 13: Striking the right balance to maximise value and returns
Striking the right balance to maximise value and returns US$17 billion reduction in net debt; ~US$27 billion reinvested; ~US$29 billion returned to shareholders17 Net debt below target range Disciplined investment Increased returns to shareholders (Net debt, US$ billion) (Capital and exploration exp
Slide 14: Return on Capital Employed
Return on Capital Employed FY19 ROCE 18%; tailored plans to improve ROCE at every asset ROCE by asset Returns (%) (ROCE excluding Onshore US, %) 40 Excludes investment in 20 major projects in execution 35 30 Antamina18 15 25 20 Queensland NSWEC 10 WAIO Coal Pampa Norte 15 Conventional Cerrejón18 Pet
Slide 15: Financial results Year ended 30 June 2019
Financial results Year ended 30 June 2019 Onshore US assets have been presented as discontinued operations. Andrew Mackenzie Chief Executive Officer Peak Downs
Slide 16: Market outlook
Market outlook Near-term uncertainty, attractive medium-term fundamentals, long run strategic themes Short term Medium term Long term Growth in Policy Growth Steeper Electrification New supply population, uncertainty modest cost curves of transport wealth Sentiment Prudently Sustainable Emerging Dec
Slide 17: Our strategic framework
Our strategic framework We aspire to have industry-leading capabilities applied to a portfolio of world-class assets in the most attractive commodities Culture and capabilities that enable Commodities with high economic the execution of our business strategy rent potential that match our capabilitie
Slide 18: Minerals Australia
Minerals Australia Reliability to drive cost reductions and strong operating performance Operational performance momentum builds into FY20 Record costs performance and run rate at WAIO (US$/t) (Iron ore production, Mtpa) • WAIO production up 20% and unit costs down >50% since FY14 30 20 300 – 15% in
Slide 19: Minerals Americas
Minerals Americas Transformation key to performance uplift Record throughput at all Chilean operations Escondida step change in mining and concentrator performance (Material moved, Mt/FTE) (Throughput, ktpd) • Escondida: transformation programs underpin increased throughput in H2 FY19 150 450 to ave
Slide 20: Petroleum
Petroleum Strong operating performance supported by promising short, medium and long-term growth options High-return options within current portfolio to offset field decline Exploration and appraisal success... (Net exploration wells) (Successful wells/wells drilled, %) • Uptime and field performanc
Slide 21: We expect to deliver on our plans in FY20
We expect to deliver on our plans in FY20 Continued progress against our focus areas Maximise cash flow Capital discipline Value and returns Cu Eq volumes Net debt 2% higher to remain at lower end 19% ROCE despite 7% reduction in petroleum of revised US$12-17 bn target range at spot prices Transform
Slide 22: Broad suite of attractive opportunities
Broad suite of attractive opportunities Optionality Transformation, future options and exploration evaluated and ranked based on returns, risk and optionality In execution T&T, GoM Ecuador, South South Flank Atlantis Phase 3 Higher exploration Australia exploration (Iron ore) (Petroleum) return (Pet
Slide 23: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capabilities and discipline to sustainably grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$12-17 bn net debt ROCE to ~20% efficiency, technology, culture range updated
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Slide 25: Appendix
BHP Appendix
Slide 26: Samarco and Renova Foundation
Samarco and Renova Foundation Resettlement a priority social program Rehabilitation Compensation Samarco legal developments (Renova Foundation) (Renova Foundation) and restart Communities • BRL$1.7 billion indemnification and • Preparation work for construction of new financial aid paid to June 2019
Slide 27: Broad suite of attractive opportunities
Broad suite of attractive opportunities Latent capacity average returns of >100%; major project average returns of ~17%; exploration offers upside potential Jansen current scope: 84% complete Jansen Stage 1: study underway Petroleum Copper Orphan Basin: Exploration plan submitted Iron Ore Trion: App
Slide 28: Unlocking value for BHP through transformation
Unlocking value for BHP through transformation The world is undergoing significant change… we will be bolder and adapt faster to take advantage of this Transformation Current programs Outcomes Technology World Class Functions Centres of Excellence IROCs Operational • Reduce bureaucracy, • Centrally
Slide 29: Balance sheet
Balance sheet Net debt of US$9.2 billion and gearing of 15.1% Movements in net debt Debt maturity profile25 (US$ billion) (US$ billion) 15 8 10.9 10 9.2 10.9 - 1.2 11.4 0.6 - 6 0.4 5 0 4 5.2 -5 2 -10 (20.5) -15 0 FY18 Free cash Share Dividends Dividends Non-cash Other FY19 FY20 FY21 FY22 FY23 FY24 F
Slide 30: IFRS 16 leases: overview
IFRS 16 leases: overview Operating lease commitments brought onto balance sheet from 1 July 2019 • Effective from 1 July 2019 • Removes distinction between operating and finance leases; introduces new identification criteria Overview − results in operating leases being recognised on balance sheet; n
Slide 31: IFRS 16 leases: impacts
IFRS 16 leases: impacts Accounting change only; no impact to net cash flows Balance sheet27 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$0.8 bn US$0.7 bn US$2.3 bn
Slide 32: Projects in feasibility
Projects in feasibility Autonomous truck hauling Jansen Stage 1 Australia Saskatchewan, Canada Automating ~500 haul trucks across Shaft equipping, mine development, processing facility, Western Australia Iron Ore and Queensland Coal sites site infrastructure and outbound logistics. Operator BHP BHP
Slide 33: BHP guidance
BHP guidance Group FY20e FY21e Capital and exploration expenditure (US$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 deferred development and pr
Slide 34: BHP guidance (continued)
BHP guidance (continued) 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) 2.5 Includes ~US$60 million exploration expenditure. Sanct
Slide 35: BHP guidance (continued)
BHP guidance (continued) Coal FY20e Medium term Metallurgical coal production (Mt) 41 – 45 49 – 54 FY20 volumes Planned wash plant shutdowns in Sept Q19 at Goonyella, Peak downs and Caval Ridge Energy coal production (Mt) 24 – 26 NSWEC: 15 – 17 Mt; Cerrejón: ~9 Mt. Capital and exploration expenditur
Slide 36: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact30 on FY20 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price31 233 US$1/bbl on oil price32 39 US$1/t on metallurgical coal price 39 US¢1/lb on copper price31 36 US$1/t on energy coal price31 15 US¢1/lb on nickel price 1.6 AUD
Slide 37: Statement of Petroleum Resources
Statement of Petroleum Resources Petroleum resources The estimates of Conventional Petroleum contingent resources contained in this presentation are on a Net revenue interest basis and are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr A
Slide 38: Footnotes
Footnotes 1. Slide 6: High potential injury frequency rate: injury events where there was the potential for a fatality. 2. Slide 6: Occupational Exposure Limits (OELs): as compared to FY18 reported exposures and discounting the protection afforded by respiratory protective equipment. 3. Slide 6: Gre
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