Slide 1: BHP Results Presentation Year Ended 30 June 2018
For personal use only 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.co
Slide 2: Financial results Year ended 30 June 2018
For personal use only Financial results Year ended 30 June 2018 Jimblebar
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 Year ended June 2018
For personal use only 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
Slide 5: BHP's investment proposition
BHP’s investment proposition Continued delivery of consistent plans is driving improvement across our business For personal use only Maximise cash flow Capital discipline Value and returns Lower costs US$10-15 bn net debt ROCE to ~20% productivity, technology, culture range to be maintained by FY22
Slide 6: FY18 financial scorecard
FY18 financial scorecard Strong operating and financial performance supports shareholder returns For personal use only Volumes Profitability Free cash flow +8% US$ 24.1 bn US$ 12.5 bn Cu Eq production growth Underlying EBITDA Free cash flow records at nine operations with strong contributions over U
Slide 7: Safety and sustainability
Safety and sustainability Health, safety and environment are core values For personal use only 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 Prog
Slide 8: Samarco and Renova Foundation
Samarco and Renova Foundation Committed to social and environmental rehabilitation For personal use only Rehabilitation Legal developments Samarco restart (Renova Foundation) • Community resettlement underway • Governance Agreement ratified • Restart important but must be safe and – new Bento Rodrig
Slide 9: Financial results Year ended June 2018
For personal use only Financial results Year ended 30 June 2018 Peter Beaven Chief Financial Officer Pyrenees
Slide 10: Financial performance
Financial performance Results reflect 8% volume growth and higher commodity prices For personal use only 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 attributab
Slide 11: Segment performance
Segment performance Strong contribution across the portfolio in FY18 For personal use only 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$1.25/lb 10% C1 excl 3rd party royal
Slide 12: Group EBITDA waterfall
Group EBITDA waterfall Efficient operations capture upside from higher commodity prices For personal use only Underlying EBITDA variance (US$ billion) 30 External US$3.5 billion Controllable US$0.3 billion 4.1 0.9 24.1 22.9 1.0 0.6 23.2 0.4 (0.2) (0.4) (0.3) 19.4 (1.2) (0.2) 20 10 0 11 9 10 12 FY17
Slide 13: Productivity
Productivity Notwithstanding one-off issues in H1, strong productivity momentum in H2 to be carried into FY19 and beyond For personal use only FY18 productivity performance Cumulative productivity gains (US$ million) (US$ billion) 16 Record production runrates 14 1,000 Geotechnical 12 issues Planned
Slide 14: Cost efficiencies
Cost efficiencies On track to deliver medium-term unit cost guidance For personal use only 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 Petro
Slide 15: Cash generation
Cash generation Over US$12 billion free cash flow for second consecutive year For personal use only Operating cash flow Free cash flow (US$ 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 F
Slide 16: Capital allocation
Capital allocation Investment of US$6.8 billion; net debt reduction of >US$5 billion; shareholder returns of >US$5 billion For personal use only 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
Slide 17: Balance sheet
Balance sheet Net debt of US$10.9 billion; gearing of 15.3%; average debt maturity of 8.9 years16 For personal use only Net debt and gearing Movements in net debt (Net debt, US$ 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
Slide 18: Investing for the future
Investing for the future Ongoing improvements in capital productivity are enabling us to thrive on lower levels of capex For personal use only 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
Slide 19: Return on Capital Employed
Return on Capital Employed FY18 ROCE improves to 14% (after tax) or ~18% excluding Onshore US For personal use only 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
Slide 20: Financial results Year ended June 2018
For personal use only Financial results Year ended 30 June 2018 Andrew Mackenzie Chief Executive Officer Yandi
Slide 21: Market outlook
Market outlook Near-term uncertainty, attractive long-term fundamentals For personal use only 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 Sustainabl
Slide 22: Our strategy
Our strategy Value and returns are at the centre of everything we do For personal use only 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 oper
Slide 23: Simple portfolio
Simple portfolio We have reshaped our portfolio through the demerger of South32 and US$18 billion of divestments22 For personal use only Large assets Long-life Low-cost Upstream ~2x ~70% >30% >80% ~50% 0% 0 0% FY13 Current FY13 Current FY13 Current FY13 Current Average Cu Eq resource size per minera
Slide 24: Distinctive enablers
Distinctive enablers Over recent years, we have become simpler and more productive with a stronger culture, but there is more to do For personal use only Delivered Culture Future plans • From command/control to front line empowerment • Zero fatalities Safety • TRIF down 6%, Field Leadership rolled o
Slide 25: Our strategy in action
Our strategy in action Value and returns agenda delivered through continued delivery across our six focus areas For personal use only Cost efficiencies Technology Latent capacity 12 years 4 4 major initiatives implemented: of continued WAIO unit cost reduction, automation of ship-loader pilot, volum
Slide 26: Minerals Australia
Minerals Australia Productivity to drive cost reductions across our operations For personal use only Record production at 7 mines, WAIO costs down 2% Queensland Coal strip ratio (Prime to product strip ratio) (Unit costs, US$/t) • WAIO costs flat in FY19 at <US$14/t 12 80 Cost – medium term <US$13/t
Slide 27: Minerals Americas
Minerals Americas Driving productivity, releasing latent capacity and investing in major projects For personal use only Escondida mining cost down 15%, record throughput Strong Escondida production despite grade decline (Production, kt) (Concentrator head grade, %) • Signed new collective agreement
Slide 28: Conventional Petroleum
Conventional Petroleum Extending production runway and securing next wave of growth For personal use only ~1 Bboe 1P reserves replaced over the last decade Leading Finding and Development costs25,26 (10-year average, US$/boe) • F&D costs >20% lower than peers and >30% lower than sector Latent 40 • ~
Slide 29: Delivered our plans in FY18
Delivered our plans in FY18… For personal use only 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
Slide 30: Expect to further deliver in FY19
…expect to further deliver in FY19… For personal use only 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 o
Slide 31: Clear path forward over the medium term
…and have a clear path forward over the medium term For personal use only 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$8 bn capex 40% base valu
Slide 32: For personal use only
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Slide 33: Appendix
For personal use only Appendix
Slide 34: Technology
Technology Integration and automation of our value chains to unlock resources and drive a step change in safety, volume and cost For personal use only GEOSCIENCE & PLANNING MINING PROCESSING TRANSPORT MARKETING • Optimised planning • Autonomous systems • Advanced process • Improved train • Meet spec
Slide 35: BHP guidance
BHP guidance For personal use only Group FY19e Capital and exploration expenditure (US$ 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 strip
Slide 36: BHP guidance (continued)
BHP guidance (continued) For personal use only 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
Slide 37: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities For personal use only 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$1/t on energy coal price29 17 US¢1/lb on
Slide 38: Debt maturity profile
Debt maturity profile For personal use only Debt balances32,33 (US$ 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 1
Slide 39: Statement of Petroleum resources
Statement of Petroleum resources For personal use only 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 un
Slide 40: Mineral Resources and Competent Persons statement
Mineral Resources and Competent Persons statement For personal use only 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
Slide 41: Mineral Resources (100% basis)
Mineral Resources (100% basis) For personal use only 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
Slide 42: Mineral Resources (100% basis)
Mineral Resources (100% basis) For personal use only 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 3,5
Slide 43: Mineral Resources (100% basis)
Mineral Resources (100% basis) For personal use only 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
Slide 44: 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