Slide 1: Financial results Year ended 30 June 2018
Financial results Year ended 30 June 2018 Jimblebar
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 2018
Financial results Year ended 30 June 2018 Following BHP’s sale of the Onshore US assets announced on 27 July 2018, the contribution of these assets have been presented as discontinued operations and related assets and liabilities reclassified to held for sale, unless otherwise noted. Andrew Mackenzi
Slide 4: BHP's investment proposition
BHP’s investment proposition Continued delivery of consistent plans is driving improvement across our business Maximise cash flow Capital discipline Value and returns Lower costs US$10-15 bn net debt ROCE to ~20% productivity, technology, culture range to be maintained by FY22 (at FY17 prices) Volum
Slide 5: FY18 financial scorecard
FY18 financial scorecard Strong operating and financial performance supports shareholder returns Volumes Profitability Free cash flow +8% US$ 24.1 bn US$ 12.5 bn Cu Eq production growth Underlying EBITDA Free cash flow records at nine operations with strong contributions over US$12 bn for second acr
Slide 6: Safety and sustainability
Safety and sustainability Health, safety and environment are core values Safety Health Environment • Two fatalities • Reducing underground mine diesel • Inaugural Water Report to be released in emissions exposure August 2018 – Goonyella Riverside (August 2017) • Resilience Program and mental health
Slide 7: Samarco and Renova Foundation
Samarco and Renova Foundation Committed to social and environmental rehabilitation Rehabilitation Legal developments Samarco restart (Renova Foundation) • Community resettlement underway • Governance Agreement ratified • Restart important but must be safe and – new Bento Rodrigues construction econo
Slide 8: Financial results Year ended June 2018
Financial results Year ended 30 June 2018 Peter Beaven Chief Financial Officer Pyrenees
Slide 9: Financial performance
Financial performance Results reflect 8% volume growth and higher commodity prices Summary FY18 Income Statement Strong margins through the cycle (US$ billion) (Underlying EBITDA margin5, %) Total operations (including Onshore US) 60 Underlying EBITDA 24.1 Underlying attributable profit 8.9 Net exce
Slide 10: Segment performance
Segment performance Strong contribution across the portfolio in FY18 Iron Ore Copper 39% of Group EBITDA6 28% of Group EBITDA6 Record 289 Mtpa run-rate in Q4 Record Spence production and Escondida ore milled Cost7: US$14.26/t 2% Cost8: US$1.25/lb 10% C1 excl 3rd party royalties7: US$13.03/t 2%
Slide 11: Group EBITDA waterfall
Group EBITDA waterfall Efficient operations capture upside from higher commodity prices Underlying EBITDA variance (US$ billion) 30 External US$3.5 billion Controllable US$0.3 billion 4.1 0.9 24.1 22.9 1.0 0.6 23.2 0.4 (0.2) (0.4) (0.3) 19.4 (1.2) (0.2) 20 10 0 11 9 10 12 FY17 Price Foreign Inflatio
Slide 12: Productivity
Productivity Notwithstanding one-off issues in H1, strong productivity momentum in H2 to be carried into FY19 and beyond FY18 productivity performance Cumulative productivity gains (US$ million) (US$ billion) 16 Record production runrates 14 1,000 Geotechnical 12 issues Planned LCE ramp-up maintenan
Slide 13: Cost efficiencies
Cost efficiencies On track to deliver medium-term unit cost guidance WAIO (US$/t) Escondida (US$/lb) 40 1.6 52% 20% 1.07 20 0.8 14.26 0 0.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19e Medium FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19e Medium Queensland Coal (US$/t) Conventional Petroleum (US$/boe) 160 20
Slide 14: Cash generation
Cash generation Over US$12 billion free cash flow for second consecutive year Operating cash flow Free cash flow (US$ billion) (Index, FY08=100) (US$ billion) (Index, FY08=100) 35 200 15 200 12.5 200 30 10 25 100 18.5 5 20 100 15 0 0 10 200 (5) 5 0 0 (10) (100) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY1
Slide 15: Capital allocation
Capital allocation Investment of US$6.8 billion; net debt reduction of >US$5 billion; shareholder returns of >US$5 billion FY18 Operating Capital productivity productivity Net operating cash flow US$18.5 bn Maintenance capital US$1.9 bn Strong balance sheet Minimum 50% payout ratio dividend14 US$3
Slide 16: Balance sheet
Balance sheet Net debt of US$10.9 billion; gearing of 15.3%; average debt maturity of 8.9 years16 Net debt and gearing Movements in net debt (Net debt, US$ billion) (Gearing, %) (US$ billion) 30 40 20 25 35 16.3 - 15 20 30 0.4 10.9 1.6 - 5.2 15 25 10 (0.1) 10 20 5 5 15 (12.5) 0 10 0 FY12 FY13 FY14 F
Slide 17: Investing for the future
Investing for the future Ongoing improvements in capital productivity are enabling us to thrive on lower levels of capex Capital and exploration expenditure FY18 FY19e (US$ billion) US$ billion US$ billion Maintenance 1.9 2.1 Improvement 1.9 2.2 Latent capacity 0.3 0.6 20 Major projects 0.9 1.9 Expl
Slide 18: Return on Capital Employed
Return on Capital Employed FY18 ROCE improves to 14% (after tax) or ~18% excluding Onshore US ROCE by asset (%) Antamina19 NSWEC Productivity, technology, latent capacity to drive 35 further improvement Pampa Norte 25 Cerrejón19 Improving prices and FY17 ROCE record throughput High-return Queensland
Slide 19: Financial results Year ended 30 June 2018
Financial results Year ended 30 June 2018 Andrew Mackenzie Chief Executive Officer Yandi
Slide 20: Market outlook
Market outlook Near-term uncertainty, attractive long-term fundamentals Short term Medium term Long term Growth in New demand Policy Growth Steeper New supply population, centres and uncertainty moderating cost curves wealth themes Decarbonisation Sentiment Prudently Sustainable Emerging and Technol
Slide 21: Our strategy
Our strategy Value and returns are at the centre of everything we do Simple portfolio Distinctive enablers Shareholder Diversified exposure to preferred value and Charter Values and commodities returns culture of connectivity Safety, productivity and Tier 1 upstream assets operational excellence Tec
Slide 22: Simple portfolio
Simple portfolio We have reshaped our portfolio through the demerger of South32 and US$18 billion of divestments22 Large assets Long-life Low-cost Upstream ~2x ~70% >30% >80% ~50% 0% 0 0% FY13 Current FY13 Current FY13 Current FY13 Current Average Cu Eq resource size per minerals Proportion of miner
Slide 23: Distinctive enablers
Distinctive enablers Over recent years, we have become simpler and more productive with a stronger culture, but there is more to do Delivered Culture Future plans • From command/control to front line empowerment • Zero fatalities Safety • TRIF down 6%, Field Leadership rolled out • Front line contin
Slide 24: Our strategy in action
Our strategy in action Value and returns agenda delivered through continued delivery across our six focus areas Cost efficiencies Technology Latent capacity 12 years 4 4 major initiatives implemented: of continued WAIO unit cost reduction, automation of ship-loader pilot, volumetric projects progres
Slide 25: Minerals Australia
Minerals Australia Productivity to drive cost reductions across our operations Record production at 7 mines, WAIO costs down 2% Queensland Coal strip ratio (Prime to product strip ratio) (Unit costs, US$/t) • WAIO costs flat in FY19 at <US$14/t 12 80 Cost – medium term <US$13/t efficiencies • Queens
Slide 26: Minerals Americas
Minerals Americas Driving productivity, releasing latent capacity and investing in major projects Escondida mining cost down 15%, record throughput Strong Escondida production despite grade decline (Production, kt) (Concentrator head grade, %) • Signed new collective agreement Cost • Volumes to aver
Slide 27: Conventional Petroleum
Conventional Petroleum Extending production runway and securing next wave of growth ~1 Bboe 1P reserves replaced over the last decade Leading Finding and Development costs25,26 (10-year average, US$/boe) • F&D costs >20% lower than peers and >30% lower than sector Latent 40 • ~30 brownfield projects
Slide 28: Delivered our plans in FY18…
Delivered our plans in FY18… Maximise cash flow Capital discipline Value and returns +8% >US$5 bn 14.4% ROCE Cu Eq volume growth net debt reduction to US$10.9 bn ~18% excluding Onshore US >US$12 bn US$6.8 bn 63 US cps free cash flow for second year capex within guidance record H2 dividend Unit costs
Slide 29: …expect to further deliver in FY19…
…expect to further deliver in FY19… Maximise cash flow Capital discipline Value and returns Cu Eq volumes Net debt ~18% ROCE broadly flat in FY19 to remain at lower end of target range at spot prices ~US$9 bn <US$8.0 bn Minimum 50% free cash flow at spot prices capex guidance of underlying earnings
Slide 30: …and have a clear path forward over the medium term
…and have a clear path forward over the medium term Maximise cash flow Capital discipline Value and returns Lower costs US$10-15 bn net debt ROCE to ~20% productivity, technology, culture range to be maintained by FY22 (at FY17 prices) Volume growth <US$8 bn capex 40% base value upside productivity,
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Slide 32: Appendix
BHP Appendix
Slide 33: Technology
Technology Integration and automation of our value chains to unlock resources and drive a step change in safety, volume and cost GEOSCIENCE & PLANNING MINING PROCESSING TRANSPORT MARKETING • Optimised planning • Autonomous systems • Advanced process • Improved train • Meet specific customer control
Slide 34: BHP guidance
BHP guidance Group FY19e Capital and exploration expenditure (US$ bn) <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 stripping of US$1.0 billion
Slide 35: BHP guidance (continued)
BHP guidance (continued) Copper FY19e Total copper production (Mt) 1.68 – 1.77 Includes Escondida at 1.12 - 1.18 Mt. Escondida Production (Mt, 100% basis) 1.12 – 1.18 Reflects significant decrease in average concentrator head grade consistent with the mine plan. Unit cash costs (US$/lb) <1.15 Exclud
Slide 36: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact28 on FY19 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price29 227 US$1/bbl on oil price30 43 US$1/t on metallurgical coal price 41 US¢1/lb on copper price29 35 US$1/t on energy coal price29 17 US¢1/lb on nickel price 1 AUD (U
Slide 37: Debt maturity profile
Debt maturity profile Debt balances32,33 (US$ billion) 8 6 4 2 0 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Post FY29 US$ Euro Sterling A$ C$ Bonds34 Bonds34 Bonds 34 Bonds Bonds Subsidiaries % of portfolio 38% 34% 12% 3% 3% 10% Capital markets 90% Asset financing 10% Financial results 2
Slide 38: Statement of Petroleum resources
Statement of Petroleum resources Petroleum resources The estimates of Conventional Petroleum reserves and contingent resources contained in this presentation are on a Net interest basis and are based on, and fairly represent, information and supporting documentation prepared under the supervision of
Slide 39: Mineral Resources and Competent Persons statement
Mineral Resources and Competent Persons statement Competent Person Statement The information in this presentation that relates to the FY2017 and FY2013 Mineral Resources (inclusive of Ore Reserves) were first reported by the Company in compliance with the ‘Australasian Code for Reporting of Explorat
Slide 40: Mineral Resources (100% basis)
Mineral Resources (100% basis) Commodity BHP interest Financial Year Measured Resources (Mt) Indicated Resources (Mt) Inferred Resources (Mt) Deposit % Minerals Australia Iron Ore WAIO 2017 2,740 5,930 20,390 88 2013 2,550 4,210 14,560 88 Energy Coal Operations - Mt Arthur Coal 2017 897 1,299 1,019
Slide 41: Mineral Resources (100% basis)
Mineral Resources (100% basis) Commodity BHP interest Financial Year Measured Resources (Mt) Indicated Resources (Mt) Inferred Resources (Mt) Deposit % Mineral Americas Copper Escondida District 2017 5,927@0.63% TCu 5,051@0.56% TCu 15,785@0.48% TCu 57.5 2013 5,785@0.67% TCu 3,542@0.54% TCu 12,930@0.
Slide 42: Mineral Resources (100% basis)
Mineral Resources (100% basis) Commodity BHP interest Financial year Measured Resources (Mt) Indicated Resources (Mt) Inferred Resources (Mt) Deposit % Divested assets Metallurgical Coal Illawarra Coal 2013 278 455 586 100 Nickel Nickel Colombia 2013 115@1.04% Ni 186@0.9% Ni 90@0.8% Ni 99.94 Energy
Slide 43: Footnotes
Footnotes 1. High potential injuries: injury events where there was the potential for a fatality. 2. Occupational Exposure Limits (OELs): in FY18, a new five-year target was established to achieve a 50% reduction in the number of workers potentially exposed to respirable silica, diesel particulate m