Bhp Group Ltd · ASX:BHP
Bhp — H1 FY2019 Earnings Presentation
37 slides from Bhp's earnings presentation, Feb 19, 2019
Slide 1: Financial results Half year ended 31 December 2018
Financial results Half year ended 31 December 2018 Western Australia Iron Ore
Slide 2: Disclaimer: Forward-looking statements
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 Half year ended 31 December 2018
Financial results Half year ended 31 December 2018 BHP’s Onshore US assets have been presented as discontinued operations. Andrew Mackenzie Chief Executive Officer Trinidad and Tobago
Slide 4: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capability and discipline to grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$10-15 bn net debt ROCE to ~20% efficiency, technology, culture range to be maintained by FY
Slide 5: H1 FY19 financial scorecard
H1 FY19 financial scorecard Returns to shareholders of ~US$13 billion over the last six months Profitability Free cash flow Net debt US$10.5 bn US$3.6 bn US$9.9 bn Underlying EBITDA and 52% margin free cash flow net debt diversified contribution >US$10 bn including down US$1 bn since June 2018 acros
Slide 6: Sustainability is one of our core values
Sustainability is one of our core values We will continue our work to improve safety at our operations Safety Health • Tragically, we had one fatality at Saraji (December 2018) • Occupational health exposures reduction projects progressing • TRIF at operated assets of 4.3 per million hours worked, •
Slide 7: Financial results Half year ended 31 December 2018
Financial results Half year ended 31 December 2018 Peter Beaven Chief Financial Officer Queensland Coal
Slide 8: Financial performance
Financial performance Solid free cash flow generation and EBITDA margin above 50% Summary H1 FY19 Income Statement Strong margins through the cycle (US$ billion) (Underlying EBITDA margin4, %) Total operations (including Onshore US) 60 Underlying attributable profit 3.7 Net exceptional items 0.1 Att
Slide 9: Group EBITDA waterfall
Group EBITDA waterfall EBITDA impacted by H1 unplanned outages; strong H2 expected; FY19 productivity expected to be broadly flat Underlying EBITDA variance (US$ billion) 15 External US$0.4 billion Controllable US$(0.7) billion 0.7 11.2 0.1 10.8 0.1 0.0 10.5 (0.2) (0.1) 10 (0.1) (0.6) (0.2) H1 FY19
Slide 10: Segment performance
Segment performance Full-year unit cost guidance unchanged with stronger volumes anticipated in H2 Iron Ore10 Petroleum11 Coal Copper Record Jimblebar Strong uptime First coal from Caval Record ore milled at production volumes performance Ridge Southern Circuit Spence and Cerro Colorado % of Group E
Slide 11: Cash generation
Cash generation Solid free cash flow generation despite higher tax payments and capital expenditure Operating cash flow Free cash flow (US$ billion) (Index, FY10=100) (US$ billion) (Index, FY10=100) 35 200.00 15 200 30 200 10 25 100 5 20 100.00 15 0 0 10 200 (5) 5 0 0.00 (10) (100) FY10 FY11 FY12 FY
Slide 12: Capital allocation
Capital allocation Disciplined adherence to our Capital Allocation Framework H1 FY19 Operating Capital productivity productivity Net operating cash flow US$7.3 bn Maintenance capital US$0.8 bn Strong balance sheet Minimum 50% payout ratio dividend14 US$2.5 bn Excess cash Includes US$0.6 bn of div
Slide 13: Striking the right balance to maximise value and returns
Striking the right balance to maximise value and returns US$16 billion reduction in net debt; ~US$20 billion reinvested; US$25 billion returned to shareholders16 Net debt slightly below target range Disciplined investment Increased returns to shareholders (Net debt, US$ billion) (Capital and explora
Slide 14: Return on Capital Employed
Return on Capital Employed H1 FY19 ROCE 15%; tailored plans to improve ROCE at every asset ROCE by asset (%) Productivity, technology, latent capacity to drive Antamina17 further improvement 30 25 NSWEC High-return options 20 to slow field decline Cerrejón17 Queensland 15 Coal WAIO Increased equipme
Slide 15: Financial results Half year ended 31 December 2018
Financial results Half year ended 31 December 2018 Andrew Mackenzie Chief Executive Officer Olympic Dam
Slide 16: 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 17: Our strategic framework
Our strategic framework Leveraging our values, capabilities and resources to meet the evolving needs of markets Culture and capabilities that Commodities with high economic enables the execution of our rent potential that match our business strategy to create long- capabilities term value and return
Slide 18: Our strategy in action
Our strategy in action Continued progress against our six focus areas Cost efficiencies Technology Latent capacity H2 reduction Integration 4 in unit costs expected with improved CIO live in July 2019; projects progressing to plan; reliability and operational performance; VCA incorporated in asset 5
Slide 19: Minerals Australia
Minerals Australia Focusing on bottlenecks to release latent capacity across our operations Cost reductions at all assets anticipated in H2 Record stripping at Queensland Coal (Prime to product strip ratio) (Prime stripping, Index, FY13=100) • WAIO FY19 unit costs: <US$14/t, 12 160 Cost –ï,” ~10% fr
Slide 20: Minerals Americas
Minerals Americas Major projects and exploration provide optionality Sustainable options with limited risk Spence productivity underpinned by maintenance excellence (Throughput, Mt) (Dry area availability, %) • EWSE on track to deliver first water in FY20 25 100 Latent • Reviewing power supply to in
Slide 21: Conventional Petroleum
Conventional Petroleum Major projects Current investments profitable well below US$50/bbl • Atlantis Phase 3 approved, first oil expected in FY21 • Mad Dog 2 on track, Greater Western Flank-B first production Pipeline of seven projects with average returns of ~25% • Ruby investment decision expected
Slide 22: We expect to deliver on our plans in FY19
We expect to deliver on our plans in FY19 Maximise cash flow Capital discipline Value and returns Cu Eq volumes Net debt 20% ROCE broadly flat in FY19, weighted to H2 to remain at lower end of target at spot prices range20 >US$9 bn <US$8 bn Minimum 50% free cash flow at spot prices capex of underlyi
Slide 23: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capability and discipline to grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$10-15 bn net debt ROCE to ~20% efficiency, technology, culture range to be maintained20 by
Slide 24: BHP
BHP
Slide 25: Appendix
BHP Appendix
Slide 26: Samarco and Renova Foundation
Samarco and Renova Foundation Committed to social and environmental rehabilitation Rehabilitation Compensation Samarco legal developments (Renova Foundation) (Renova Foundation) and restart Communities • More than 8,200 of about 19,200 general • Requires licensing approvals and the damages claims re
Slide 27: Dams and tailings management
Dams and tailings management Increased rigour of our assessment and management of tailings storage facilities since the failure of the Fundão dam at Samarco Facilities Safety Governance Centralised Canadian 115 20 External 93% dam Dam annual function Association tailings storage active tailings stor
Slide 28: Broad suite of attractive opportunities
Broad suite of attractive opportunities Latent capacity average returns of >100%; major project average returns of ~17%; exploration offers upside potential Jansen current scope: 82% complete Petroleum Jansen Stage 1: study underway Copper Orphan Basin exploration: licences acquired Iron Ore Trion:
Slide 29: The transformative power of Technology
The transformative power of Technology Systems approach to the integration and automation of our value chains to unlock resources and drive a step change in safety, volume and cost GEOSCIENCE & PLANNING MINING PROCESSING TRANSPORT MARKETING Optimised planning and Autonomous and higher Improved throu
Slide 30: BHP guidance
BHP guidance Group FY19e Capital and exploration expenditure (US$ 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$1.0 billion
Slide 31: BHP guidance (continued)
BHP guidance (continued) Copper FY19e Total copper production (Mt) 1.645 – 1.740 Includes Escondida at 1.12—1.18 Mt, Olympic Dam at 170 – 180 kt, Spence at 160 – 175 kt, Cerro Colorado at 60 – 70 kt, Antamina 135 kt. Escondida Production (Mt, 100% basis) 1.12 – 1.18 Reflects significant decrease in
Slide 32: Investing for the future
Investing for the future Ongoing improvements in capital productivity are enabling us to thrive on lower levels of capex Capital and exploration expenditure H1 FY19 FY19e FY20e (US$ billion) US$ billion US$ billion US$ billion Petroleum 0.7 1.5 1.8 Copper 1.0 2.9 2.4 Iron Ore 0.8 1.8 2.4 20 Coal 0.3
Slide 33: West Barracouta, Atlantis Phase 3, Ruby
West Barracouta, Atlantis Phase 3, Ruby West Barracouta Atlantis Phase 3 Ruby Australia USA Gulf of Mexico Trinidad and Tobago Two well brownfield subsea tieback to New subsea production system from eight Oil and gas development consisting of five existing Bass Strait facilities to supply the wells
Slide 34: Balance sheet
Balance sheet Net debt of US$9.9 billion and gearing of 15.2% Movements in net debt Debt maturity profile28,29 (US$ billion) (US$ billion) 15 8 10.9 (10.6) 6 0.6 0.3 9.9 0.1 10 3.4 4 5.2 5 2 0 0 FY18 Free cash Share Dividends Dividends Non-cash Other H1 FY19 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 F
Slide 35: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities Approximate impact31 on FY19 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price32 225 US$1/bbl on oil price33 46 US$1/t on metallurgical coal price 40 US¢1/lb on copper price32 33 US$1/t on energy coal price32 15 US¢1/lb on nickel price 2 AUD (U
Slide 36: Footnotes
Footnotes 1. Slide 6: High potential injury frequency rate: injury events where there was the potential for a fatality. 2. Slide 6: Occupational Exposure Limits (OELs): as compared to Q4 FY18 reported exposures and discounting the protection afforded by respiratory protective equipment. 3. Slide 8:
Slide 37: BHP
BHP SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BHP Group Limited and BHP Group Plc Date: February 19, 2019 By: /s/ Rachel Agnew Name: Rachel Agnew