Bhp Group Ltd · ASX:BHP
Bhp — FY2017 Earnings Presentation
33 slides from Bhp's earnings presentation, Aug 22, 2017
Slide 1: Results presentation year ended 30 June 2017
BHP Billiton Limited BHP Billiton Plc 171 Collins Street Nova South, Melbourne Victoria 3000 Australia 160 Victoria Street GPO BOX 86 London SW1E 5LB UK Melbourne Victoria 3001 Australia Tel +44 20 7802 4000 Tel +61 1300 55 47 57 Fax +61 3 9609 3015 Fax + 44 20 7802 4111 bhp.com bhp.com 22 August 20
Slide 2: Financial results Year ended 30 June 2017
Financial results Year ended 30 June 2017 Nelson Point
Slide 3: 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 4: Financial results Year ended June 2017
Financial results Year ended 30 June 2017 Andrew Mackenzie Chief Executive Officer BMA
Slide 5: Key messages
Key messages We are focused on cash flow, capital discipline and value Maximise cash flow Capital discipline Value and returns US$12.6 billion 274% US$16.3 billion $9.8 bn ROCE up to 10% (after tax) free cash flow net debt further improvement expected US$4.4 billion 175% US$10-15 billion Onshore US
Slide 6: FY17 scorecard
FY17 scorecard Strong cash generation delivers debt reduction and shareholder returns Safety Tragically two of our colleagues died over the last 14 months TRIF of 4.21 Financial Attributable profit of US$5.9 billion; Underlying EBITDA of US$20.3 billion, up 64% highlights Free cash flow of US$12.6 b
Slide 7: Safety and sustainability
Safety and sustainability We achieve nothing unless we achieve it safely Committed to social and environmental rehabilitation in Brazil • Tragically, we had a fatality at Escondida (October 2016), and • Progress on social and environmental remediation programs more recently at Goonyella Riverside (A
Slide 8: Financial results Year ended June 2017
Financial results Year ended 30 June 2017 Peter Beaven Chief Financial Officer Spence
Slide 9: Financial performance
Financial performance Productivity and simplified structure underpin margins Summary FY17 Income Statement Strong margins through the cycle (US$ billion) (Underlying EBITDA margin6, %) 60 Underlying EBITDA 20.3 64% EBITDA margin 55% Underlying EBIT 12.4 257% Adjusted effective tax rate4 34.0% Ad
Slide 10: Group EBITDA waterfall
Group EBITDA waterfall Prices and productivity underpin EBITDA improvement Underlying EBITDA variance (US$ billion) External US$7.4 billion Controllable US$0.6 billion 8.2 1.0 20.3 19.7 0.3 20 (0.5) (0.3) 0.0 (0.4) 0.0 (0.3) 12.3 10 0 FY16 Price 7 Foreign Inflation Sub-total Growth Productivity Cont
Slide 11: Segment performance
Segment performance Balanced contribution across the portfolio Iron Ore Petroleum 44% of Group EBITDA11 20% of Group EBITDA11 High margins on record volumes Over 200% reserve replacement Cost12: US$14.60/t 3% Conventional cost: US$8.82/boe 2% EBITDA: US$9.1 bn 62% EBITDA: US$4.1 bn 11% EBITD
Slide 12: Cash generation
Cash generation Productivity and discipline capture rising prices Operating cash flow Free cash generation (US$ billion) (Index, FY08=100) (US$ billion) (Index, FY08=100) 30 200 15 235 12.6 200 200 10 16.8 5 100 15 100 0 0200 (5) 0 0 (10) (100) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY08
Slide 13: Capital allocation
Capital allocation Relentless focus on capital discipline, debt reduction and shareholder returns FY17 Operating Capital productivity productivity Net operating cash flow Less: dividends to US$16.8 bn NCIs of US$0.6 bn15 Maintenance capital US$1.2 bn Strong balance sheet Minimum 50% payout ratio d
Slide 14: Balance sheet
Balance sheet Net debt US$16.3 billion; gearing 20.6%; average debt maturity 9.1 years Net debt and gearing Movements in net debt (Net debt, US$ billion) (Gearing, %) (US$ billion) 30 40 30 26.1 Non-cash 0.6 2.9 0.5 17 16.3 15 25 15 (1.2)18 (12.6) 0 10 0 FY12 FY13 FY14 FY15 FY16 FY17 FY16 Free cash
Slide 15: Investing for the future
Investing for the future Expected average returns on FY18 development19 capex of over 20% Capital and exploration expenditure (cash basis) (US$ billion) 20 Exploration 10 Major projects $6.9 bn Onshore US $5.2 bn Latent capacity Improvement Maintenance 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18e Capital a
Slide 16: Jansen
Jansen Jansen will proceed only if it passes strict capital allocation framework tests Market • 2-3% expected annual potash demand growth with demand to outstrip supply in mid 2020s fundamentals • While long-term fundamentals remain robust, Jansen now timed for this later market window First quartil
Slide 17: Return on Capital Employed
Return on Capital Employed FY17 ROCE improves to 10% (after tax) ROCE by asset (%) Productivity and technology to further improve performance Antamina20 25 NSWEC Cerrejón20 15 Pampa Norte WAIO QCoal No strike and ramp-up of LCE, EWS Reliability, SMA, BFX Detailed plans to improve, Conventional optim
Slide 18: Financial results Year ended June 2017
Financial results Year ended 30 June 2017 Andrew Mackenzie Chief Executive Officer Neptune
Slide 19: Market outlook
Market outlook Near-term uncertainty, attractive long-term fundamentals Short term Medium term Long term Growth in Uncertainty Modest Steeper New demand New supply population, high growth cost curves centres wealth Balanced Petroleum Sustainable Emerging Decarbonisation Technology risks rebalancing
Slide 20: 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 21: Strategy execution
Strategy execution We continued to make strong progress on our plans in FY17 Productivity Additional productivity gains of US$1.3 billion 4% reduction in unit costs2 Latent Spence Recovery Optimisation and Jimblebar crusher completed capacity Los Colorados Extension ramping-up and Caval Ridge Southe
Slide 22: Onshore US
Onshore US Onshore US assets are non-core and we are actively looking to exit for value Alternatives Considerations Trade sale Valuation and marketability Asset swap22 Impact on shareholders Demerger Clean exit IPO Funding requirements Retain Certainty of completion prepared to be patient if value n
Slide 23: We delivered against our plans in FY17…
We delivered against our plans in FY17… ROCE (%) Maximise Free cash flow of US$12.6 billion 20 cash flow All operating assets free cash flow positive Capital US$9.8 billion reduction in net debt 10 discipline Capital productivity underpins ~30% capex reduction Value and ROCE up to 10% returns US$4.4
Slide 24: …and will further deliver in FY18…
…and will further deliver in FY18… ROCE (%) Maximise >7% copper equivalent volume growth 20 cash flow Free cash flow of >US$10 billion at spot prices24 Capital Average returns of over 20% on FY18 development capex19 10 discipline SGO, Mad Dog Phase 2 and three latent capacity projects progressing Va
Slide 25: …and will continue to deliver over the medium term
…and will continue to deliver over the medium term ROCE (%) Maximise Productivity gains of US$2 billion by end-FY19 20 cash flow Focused on unit cost reductions (e.g. <US$13/t at WAIO) Capital Net debt range of US$10-15 billion 10 discipline <US$8 billion p.a. capital and exploration expenditure ove
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Slide 27: Appendix
BHP Appendix
Slide 28: Samarco and Renova Foundation
Samarco and Renova Foundation Committed to social and environmental rehabilitation Rio Gualaxo do Norte October 2016 December 2016 January 2017 February 2017 Rehabilitation (Renova Foundation) Legal developments Samarco mine restart • Dams stabilised, tailing releases controlled • Constructive Preli
Slide 29: BHP guidance
BHP guidance Group FY18e Capital and exploration expenditure (US$bn) 6.9 Cash basis. Including: Maintenance 2.0 Includes non-discretionary capital expenditure to maintain asset integrity, reduce risks, and meet compliance requirements. Also includes deferred development and production stripping of U
Slide 30: BHP guidance (continued)
BHP guidance (continued) Copper FY18e Total copper production (Mt) 1.66 – 1.79 Escondida at 1.130 - 1.230 Mt, Pampa Norte production is expected to increase, Olympic Dam at 150 kt and Antamina production at 125 kt and zinc at 100 kt. Operated copper assets unit cash costs (US$/lb) ~1.15 Includes Esc
Slide 31: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact25 on FY18 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price26 241 US$1/bbl on oil price27 64 US¢10/MMbtu on US gas price 23 US$1/t on metallurgical coal price 43 US¢1/lb on copper price26 39 US$1/t on energy coal price26 18 U
Slide 32: Debt maturity profile
Debt maturity profile Debt balances29, 30 (US$ billion) 8 6 4 2 0 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Post FY28 US$ Euro Sterling A$ C$ Bonds31 Bonds31 Bonds 31 Bonds Bonds Subsidiaries % of portfolio 36% 35% 13% 6% 2% 8% Capital markets 92% Asset financing 8% Financial results 22
Slide 33: Footnotes
Footnotes 1. BHP operated assets. 2. Operating cost per copper equivalent tonne presented on a continuing operations basis excluding royalties and BHP's share of volumes from equity accounted investments; copper equivalent production based on FY17 average realised prices. 3. FY06 to FY14 presented o