Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — JP Morgan Australasian Conference 2002
24 slides from Bhp's conference presentation, October 2002
Slide 1: BHP Billiton: An Equation for Investors
BHP Billiton An Equation for Investors Brian Gilbertson - Chief Executive JP Morgan Australasian Conference Edinburgh October 2002
Slide 2: BHP Billiton... Superb Global Vehicle, Such Good Value
BHP Billiton... Superb Global Vehicle Such Good Value ry Slide 2 bhpbilliton
Slide 3: An equation for investors
An equation for investors Slide 3
Slide 4: The BHP Billiton strategy
The BHP Billiton strategy Slide 4
Slide 5: 1990 – Industry structure
1990 – Industry structure In 1990 the top five companies accounted for less than 25% of total resource equity market value 12 Anglo Am. Market value of minerals industry US$150 bn Rio Tinto BHP Value of Top Five US$36 bn Market Cap. at end of 1990 (US$B) 10 8 De Beers Placer Dome Newmont Gencor Drie
Slide 6: 2002 - Industry structure
2002 - Industry structure Top five companies account for around 50% of resource equity market value – double their share of 10 years ago BHPB 35 Market value of minerals industry US$235 bn Rio Tinto Value of Top Five US$110 bn 30 Market Cap. on 16/09/02 (US$B) 25 Anglo Alcoa 20 Newmont 15 AngloGold
Slide 7: Value Drivers - What distinguishes us from the rest
Value Drivers - What distinguishes us from the rest I. Stability From Outstanding Assets II. Stability From The Portfolio Effect III. Stability & Growth From Customer-Centric Marketing IV. Growth From Deep Inventory of Projects V. Growth From Petroleum VI. Growth Through Innovation Slide 7
Slide 8: Value Driver I: Stability from Outstanding Assets
Value Driver - I I. Stability from Outstanding Assets Strategic Performance FY02 imperatives measures performance Zero harm Improve HSEC statistics Fatalities - 13 LTIFR - 2.24 Community - 1% of pre- 1.47% tax profits Operating excellence Cut operating costs by Underway 2% pa Return on capital >15%
Slide 9: Cash Operating Margin
Low cost, high margin asset base c.80% of operating asset EBIT comes from first quartile cash operating margin assets 1st Quartile Highest Margin Cash Operating Margin 2nd Quartile 3rd Quartile 4th Quartile Lowest Margin 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Operating Asset EBIT (FY
Slide 10: Control of costs
Control of costs $220m achieved in FY02 Merger Merger synergies synergies $270m $270m 2% real p.a. FY03 - FY05 Further Further target target $500m $500m Slide 10
Slide 11: Value Driver II: Stability from the Portfolio Effect
Value Driver - II II. Stability from the Portfolio Effect Strategic Performance FY02 imperatives measures performance Portfolio management Credit rating of ‘A’ or S&P: A better Moodys: A3 Funding and capital Positive cashflow $1.3bn management (pre div & funding EBITDA interest cover 11.0x >8x Slide
Slide 12: Stability through diversification
Stability through diversification By Commodity Carbon Steel Materials Petroleum Customer Sector Group EBIT: Energy Coal 7% 6% Aluminium 13% 30% Diamonds & Spec. Prod. Base Metals 15% 29% Stainless Steel Materials South America 8% 5% Australia Southern Africa 20% 34% North America By Geography 33% Re
Slide 13: Financial stability
Financial stability “BHP “BHPBilliton BillitonPlc Plcsuccessfully successfully “…While “…WhileBHP BHPBilliton Billitonenjoyed enjoyedaa placed €750mininbonds placed €750m bonds popular populardebut debutininthe theEurobond Eurobond with withincreasingly increasinglychoosy choosy market, market,other
Slide 14: Cash flow at risk
Cash flow at risk 5th Percentile Mean US$4 bn US$5 bn US$1 billion CFAR Frequency 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 Pre-Tax Cashflow (Indicative) ($bn) Slide 14
Slide 15: Stability of cashflow
Stability of cashflow Q4 Q4 FY02 FY02 Cashflow Cashflow Applying Applying Historical Historical Price Price Changes Changes 1500 1500 Lead Leadup upto toGulf GulfWar Cyclical Cyclicalpeak peakininGDP GDP&& Opec War Opecdominance dominance Industrial Production Industrial Production millions) (US$ mi
Slide 16: Value Driver III: Stability & Growth from Customer-Centric Marketing
Value Driver -III III. Stability & Growth from Customer-Centric Marketing Strategic Performance FY02 imperatives measures performance Serving customers Preferred supplier status Marketing hubs best established Slide 16
Slide 17: Customer-centric marketing
Customer-centric marketing Strategy, Corporate Governance Portfolio composition, M&A Corporate Centralised Marketing Function Marketing The Singapore Hague CUSTOMER SECTOR GROUPS – the business units Carbon Diamonds Stainless Base Energy Aluminium Steel Specialty Steel Petroleum Metals Materials Pro
Slide 18: Value Driver IV: Growth from Deep Inventory of Projects
Value Driver - IV IV. Growth from Deep Inventory of Projects Strategic Performance FY02 imperatives measures performance Investment judgement Decide/implement projects $2.9bn in projects sanctioned Project management skills Slide 18
Slide 19: Growth from project pipeline
Growth from project pipeline BROWNFIELD Mozal Mozal22 Yabulu Yabulu R’thorpe R’thorpe Aluminium Bream Gas Base Metals Pipeline Mount Mount Hillside Esc’da Esc’da Hillside 33 Norte Carbon Steel Escondida Escondida Arthur Arthur North North Norte GoM Phase Phase IV IV NWS Infrastr. Energy Coal Zamzama
Slide 20: Pursuit of high value growth
Pursuit of high value growth …US$10 billion in growth projects 40 Investment by Business (% of group total in 2002-06) 30 20 35-40 10 15-20 15 10 10 10 0 Petroleum Base Metals Aluminium Energy Coal Carbon Stainless Steel Steel & Materials Other * Indicative data only Slide 20
Slide 21: Value Driver V: Growth from Petroleum
Value Driver - V V. Growth from Petroleum Strategic Performance FY02 imperatives measures performance Value adding growth Low discovery costs F&D costs US$5.40/bbl Growing reserves and Reserve production replacement ratio 134% Slide 21
Slide 22: Petroleum - room for growth
Petroleum - room for growth Annual Production (MMboe) Oil & Gas and Energy - Market Value (US$M) 1. EXXONMOBIL 1. EXXONMOBIL 2. SHELL 2. BP 3. BP 3. RD/SHELL 4. CHEVRONTEXACO 4. TOTALFINAELF 5. TOTALFINA ELF 5. CHEV-TEXACO 6. CONOCOPHILLIPS 6. ENI 7. ENI 7. PETROCHINA 8. REPSOL-YPF 8. BHP BILLITON 9
Slide 23: Value Driver VI: Growth Through Innovation
Value Driver - VI VI. Growth Through Innovation Slide 23
Slide 24: Our equation for investors
Our equation for investors Slide 24
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