Slide 1: BHP Results Presentation Year Ended 30 June 2020
For personal use only 18 August 2020 To: Australian Securities Exchange New York Stock Exchange BHP RESULTS PRESENTATION YEAR ENDED 30 JUNE 2020 Attached are the presentation slides for a presentation by the Chief Executive Officer and Chief Financial Officer. The webcast for this presentation can b
Slide 2: Financial results Year ended 30 June 2020
For personal use only Financial results Year ended 30 June 2020 Escondida
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; production forecasts; plans, strategies and objectives of management; clo
Slide 4: Financial results Year ended 30 June 2020
For personal use only Financial results Year ended 30 June 2020 Mike Henry Chief Executive Officer Nickel West
Slide 5: Resilient results in extraordinary times
Resilient results in extraordinary times Performance underpinned by reliable operational delivery and continuous improvement For personal use only Dynamic and effective response to COVID-19 Safer, lower cost and more reliable Strong free cash flow ensuring net debt at the low end of our target range
Slide 6: Response to COVID-19
Response to COVID-19 Great people, strong relationships and clear priorities supported continued operational performance For personal use only Underpinned by financial strength, structure, culture, safety focus and social value Operational resilience Diversified portfolio with balanced commodity exp
Slide 7: FY20 financial highlights
FY20 financial highlights Resilient margins, strong earnings, net debt at the bottom of our target range For personal use only Earnings Margin Free cash flow US$ 22.1 bn 53% US$ 8.1 bn Underlying EBITDA down 5% Underlying EBITDA margin free cash flow Net debt Shareholder returns ROCE 55 US cps US$ 1
Slide 8: FY20 operational highlights
FY20 operational highlights Safer, lower cost, more reliable For personal use only Safety Production Unit costs Safer Records Zero fatalities Lower at WAIO, Caval Ridge, Broadmeadow 23% decrease in HPI1 by 9% across major assets2 and Poitrel 11% decrease to 4.2 TRIF Reliability Minerals exploration
Slide 9: FY20 social value highlights
FY20 social value highlights Social value integrated into all we do For personal use only Inclusion & diversity Local spend GHG emissions ↑ ~4,000 to 27% 18% 12% FY20 15.8 Mt CO2-e of total external expenditure FY16 FY17 FY18 FY19 FY20 paid directly to local suppliers FY17 FY18 FY19 FY20 Female work
Slide 10: Financial results Year ended 30 June 2020
For personal use only Financial results Year ended 30 June 2020 Peter Beaven Chief Financial Officer Queensland Coal
Slide 11: Financial performance
Financial performance EBITDA margin 53% and continued earnings per share growth For personal use only Summary income statement Strong earnings delivery FY20 % change (US cents per share) (Index, FY16=100) (US$ billion) 200 200 Underlying EBITDA 22.1 5% Underlying EBITDA margin 53% Underlying EBIT
Slide 12: Group EBITDA waterfall
Group EBITDA waterfall Strong underlying performance across the portfolio, despite COVID-19 headwinds For personal use only Underlying EBITDA variance (US$ billion) External US$0.2 billion Controllable US$(1.3) billion 25 23.2 1.0 0.6 23.4 0.1 0.1 22.1 (0.3) (0.4) (0.5) (1.1) (0.6) 20 FY20 volume an
Slide 13: Segment performance
Segment performance Strong underlying performance, offset planned maintenance, natural field decline and grade decline For personal use only Iron Ore7 Copper Metallurgical Coal Petroleum9 300 Mtpa run rate, Record throughput Record volumes Broadmeadow, Resilient portfolio with a quarterly record at
Slide 14: Cash generation
Cash generation Attractive free cash flow while continuing to invest through the cycle For personal use only Net operating cash flow Free cash flow (US$ billion) (Index, FY10=100) (US$ billion) (Index, FY10=100) 35 200 25 30 20 200 200 25 15 20 10 100 100 15 5 10 0 0 200 5 (5) 0 0 (10) (100) FY10 FY
Slide 15: Capital allocation
Capital allocation Investing in value growth; disciplined adherence to our Capital Allocation Framework For personal use only FY20 Operating Capital productivity productivity Net operating cash flow US$15.7 bn Maintenance capital US$1.9 bn Strong balance sheet Minimum 50% payout ratio dividend12 U
Slide 16: Maximise value and returns
Maximise value and returns Net debt US$12.0 billion at lower end of the range; since 2016 ~US$35 billion reinvested; ~US$36 billion returned to shareholders13 For personal use only Net debt at low end of target range Disciplined investment Returns to shareholders (Net debt, US$ billion) (Capital and
Slide 17: Return on Capital Employed
Return on Capital Employed FY20 ROCE 17%; strong underlying performance despite challenging operating and market conditions For personal use only ROCE by asset Returns (%) (ROCE excluding Onshore US, %) 50 30 Excludes investment in 20 major projects in execution 25 20 15 Antamina16 15 WAIO16 10 10 E
Slide 18: Financial results Year ended 30 June 2020
For personal use only Financial results Year ended 30 June 2020 Mike Henry Chief Executive Officer Mt Whaleback
Slide 19: External environment
External environment Near-term uncertainty continues, attractive medium-term fundamentals, with long-term strategic themes intact and accelerating For personal use only Short term Medium term Long term Growth in Society Demand Uneven Policy Electrification population, in flux volatility recovery unc
Slide 20: Growing value in a dynamic world
Growing value in a dynamic world Building on our strong foundations to prosper in uncertain times and create value in the longer term For personal use only Consistent strategy to own and operate the best assets in the best commodities Strategy to be underpinned by reliable, safe delivery of leading
Slide 21: Approach to portfolio
Approach to portfolio Strategic scenarios inform management of portfolio for value and returns over time For personal use only Value Decarbonisation of stationary power • Early retirement of non-renewable resources • Standalone renewable cost competitiveness • Grid flexibility solutions become econo
Slide 22: Enhancing portfolio to unlock value and growth
Enhancing portfolio to unlock value and growth Demonstrated track record and well positioned to maximise long-term value and deliver high returns For personal use only Metallurgical Coal: premium franchise Iron ore: competing on cost and quality Petroleum: oil high margin with optionality • World’s
Slide 23: Enhancing portfolio to unlock value and growth
Enhancing portfolio to unlock value and growth Demonstrated track record and well positioned to maximise long-term value and deliver high returns For personal use only Copper: multiple attractions Nickel: battery revolution underway Potash: feeding the world • Large resource base with high-quality •
Slide 24: Strengthening safety, performance and portfolio
Strengthening safety, performance and portfolio Five levers to enable BHP to become the best operator and reliably deliver leading financial returns and social value For personal use only Bedrock of • Right workforce; inclusive and diverse • Strengthening leadership; increasing time in field Cultu
Slide 25: Team aligned to strategy
Team aligned to strategy Experienced team to lead culture, performance and growth For personal use only Chief People President Chief Executive Chief Financial Chief Commercial Officer Petroleum Officer Officer Officer Athalie Williams Geraldine Slattery Mike Henry David Lamont Vandita Pant Chief Ext
Slide 26: Investment proposition
Investment proposition We have the people, assets, options, and discipline to sustainably grow long-term shareholder value and returns For personal use only Maximise cash flow Capital discipline Value and returns Net debt Low-cost producer targeting lower end 20% FY20 ROCE efficiency, technology, cu
Slide 27: For personal use only
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Slide 28: Appendix
For personal use only Appendix
Slide 29: Social Value scorecard
Social Value scorecard We transparently track our performance on our social value commitments and we are making good progress For personal use only Category Key indicators1 FY19 H1 FY20 H2 FY20 FY20 Target Fatalities 1 0 0 0 Zero work-related fatalities High Potential Injury (HPI) frequency Year-on-
Slide 30: Asset performance and plans
Asset performance and plans Low cost operations, commercial agility, growth options For personal use only Petroleum Medium term Petroleum projects Flexible options within current portfolio to suit market conditions Attractive opportunities with execution flexibility • Resilient even in a low price e
Slide 31: Asset performance and plans
Asset performance and plans Escondida throughput record; Spence Growth Option progressing on budget For personal use only Escondida Pampa Norte New concentrator throughput record of 371 ktpd Consistent performance • Strong cost management • Spence: strong leaching result, partially offsetting grade
Slide 32: Asset performance and plans
Asset performance and plans Olympic Dam and Nickel West sustainably increasing production and returns For personal use only Olympic Dam Nickel West Focused on operational stability Building strong foundations • Multi-year asset integrity program progressing well and tracking to plan • Estimate of Or
Slide 33: Asset performance and plans
Asset performance and plans Value growth through continuous improvement; South Flank on track for first production in mid-CY21 For personal use only WAIO Queensland Coal Reliable delivery of record production and lower costs Strong operating performance • Record annualised run rate >300 Mtpa Q4 FY20
Slide 34: Samarco and Renova Foundation
Samarco and Renova Foundation Resettlement remains a priority social program but progress slowed by COVID-19 For personal use only Communities Resettlement Samarco restart Compensation • Bento Rodrigues and Paracatu: • Received LOC (Corrective Operating • BRL$2.5 billion indemnification and construc
Slide 35: Exceptional items
Exceptional items Attributable profit of US$8.0 billion includes an exceptional loss of US$1.1 billion For personal use only Gross Tax Net Year ended 30 June 2020 US$M Year ended 30 June 20201 US$M US$M US$M Other income 489 Exceptional items by category Expenses excluding net finance costs: Costs i
Slide 36: Working capital and balance sheet
Working capital and balance sheet Net debt of US$12.0 billion and gearing of 18.7% For personal use only Movements in working capital Debt maturity profile3 (US$ billion) (US$ billion) 2.0 Includes employee provision 8 0.6 movements, timing of operational payments and embedded 1.0 0.8 derivative mov
Slide 37: Net debt: definition and IFRS
Net debt: definition and IFRS 16 Operating lease commitments brought onto balance sheet from 1 July 2019 For personal use only • Net debt target range US$12-17 bn Net debt – changes in net debt definition to include debt-related derivatives of ~US$0.2 bn on 1 July 2019 (unrelated to IFRS 16) definit
Slide 38: IFRS Leases: FY20 impacts
IFRS 16 Leases: FY20 impacts Accounting change only; no impact to net cash flows For personal use only Balance sheet1 Income statement Cash flow statement Disclosures Financial metrics Right of use assets Operating lease Operating costs Operating cash outflow Net debt (PP&E) commitments (IAS 17) US$
Slide 39: IFRS Leases: FY20 impacts
IFRS 16 Leases: FY20 impacts Accounting changes only, no impact to net cash flows For personal use only Balance sheet Income statement Unit cost Lease liabilities Depreciation1 EBITDA1 No change to unit Group US$2.8 bn US$0.6 bn US$0.6 bn cost guidance WAIO2 US$0.12 bn US$0.05 bn US$0.08 bn 3% Queen
Slide 40: Projects in feasibility
Projects in feasibility For personal use only Jansen Stage 1 Scarborough Saskatchewan, Canada Australia 13 subsea wells tied back to a semisubmersible FPU2; dry gas Shaft equipping, mine development, processing facility, site pipeline ~435 km in length transports dry gas from the FPU to infrastructu
Slide 41: Technology
Technology Streamlined, more effective and nimble function leading charge to solve asset challenges For personal use only Effectiveness Remote operating Testing grounds Restructured Integration Innovation Reorientated to apply technology more CIO live in Santiago in July 2019; Best of technologies t
Slide 42: Improving through standardisation and ways of working
Improving through standardisation and ways of working Empowering our people to continuously improve through standardised systems, processes and ways of working For personal use only Maintenance and Engineering Centre of Excellence (MECoE) Operations Services (OS) Combines advanced planning capabilit
Slide 43: BHP guidance
BHP guidance For personal use only Group FY21e FY22e Capital and exploration expenditure (US$bn) ~7 ~8.5 Cash basis. Including: Maintenance 2.1 Includes non-discretionary capital expenditure to maintain asset integrity, reduce risks and meet compliance requirements. Also includes capitalised deferre
Slide 44: BHP guidance (continued)
BHP guidance (continued) For personal use only Copper FY21e Medium term Copper production (kt) 1,480 – 1,645 Escondida: 940 – 1,030 kt; Olympic Dam: 180 – 205 kt; Pampa Norte 240 – 270 kt; Antamina: 120 – 140 kt (zinc 140 – 160 kt). Capital and exploration expenditure (US$bn) 2.3 Includes ~US$60 mil
Slide 45: BHP guidance (continued)
BHP guidance (continued) For personal use only Coal FY21e Medium term Metallurgical coal production (Mt) 40 – 44 46 – 52 Expected deterioration in market outlook due to the impact of COVID-19. Energy coal production (Mt) 22 – 24 NSWEC: 15 – 17 Mt; Cerrejón: ~7 Mt. Capital and exploration expenditure
Slide 46: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities For personal use only Approximate impact1 on FY21 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price2 233 US$1/bbl on oil price3 32 US$1/t on metallurgical coal price 37 US¢1/lb on copper price2 32 US$1/t on energy coal price2 16 US¢1/lb on nick
Slide 47: Ore Reserves - Competent Person Statement
Ore Reserves - Competent Person Statement Competent Person Statement The information in this presentation that relates to Nickel West Ore Reserves estimate as at 30 June 2020 is based on information prepared by the Competent Persons for each deposit in accordance with the Australian Securities Excha
Slide 48: Nickel West Total FY2011 to FY2020 Ore Reserves
Nickel West Total FY2011 to FY2020 Ore Reserves (100% basis) For personal use only Proved Ore Reserves (Mt) Probable Ore Reserves(Mt) Total Ore Reserves BHP Financial Interest Deposit Year Mt %Ni Mt %Ni Mt %Ni ktNi % Nickel West 2020 194 0.57 82 0.78 276 0.63 1740 100 2019 182 0.57 77 0.73 258 0.61
Slide 49: Footnotes
Footnotes 1. Slide 7: High Potential Injury frequency: number of injuries from events where there was the potential for a fatality per million hours worked, presented on a total operations basis. 2. Slide 7: Based on the copper equivalent for major assets (Queensland Coal, WAIO, Petroleum and Escond
Slide 50: For personal use only
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