Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Securities Institute of Australia, Sydney (April 2002)
32 slides from Bhp's conference presentation, April 2002
Slide 1: A Strategic Framework for an Industry Leader
BHP Billiton A Strategic Framework for an Industry Leader Paul Anderson - CEO & Managing Director Brian Gilbertson - Deputy CEO Securities Institute of Australia Sydney April 2002
Slide 2: A Strategic Framework for an Industry Leader
BHP Billiton A Strategic Framework for an Industry Leader Paul Anderson - CEO & Managing Director Securities Institute of Australia Sydney April 2002
Slide 3: Ohpoilliton
de Ohpoilliton
Slide 4: A Strategic Framework for an Industry Leader
BHP Billiton A Strategic Framework for an Industry Leader Brian Gilbertson - Deputy CEO Securities Institute of Australia Sydney April 2002
Slide 5: Industry Consolidation
Industry Consolidation Gold Fields- Driefontein Placer Dome - MINERALS M&A Barrick-Homestake * Combined Mk Getchell Cap. of BHPB Billiton IPO restructure (Deals above US$1B) merger Billiton increases Rio acquires North Ltd. stake in Worsley BHP merges Newmont acquires Santa Fe Anglo acquires Shell c
Slide 6: 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$150B Rio Tinto Value of Top Five US$36B BHP Market Cap. at end of 1990 (US$B) 10 8 De Beers Placer Dome Newmont Gencor Alcoa Am
Slide 7: 2002 – Industry Structure
Page 7 Market Cap. On 02/04/02 (US$B) 0 5 10 15 20 25 30 35 40 BHPB ALCOA Rio Tinto Anglo Alcan Newmont Mining CVRD 2002 – Industry Structure Barrick Gold WMC Anglogold Pechiney Placer Dome value – double their share of 10 years ago. Impala Platinum INCO Phelps Dodge Noranda Freeport-McMoran Lonmin
Slide 8: 3 Year Mining Industry Return Analysis
3 Year Mining Industry Return Analysis Consolidation driving better share growth return for Top Four 100% 80% Top Four share movement 60% 40% 20% 0% World Mining Index 02/04/99 02/07/99 02/10/99 02/01/00 02/04/00 02/07/00 02/10/00 02/01/01 02/04/01 02/07/01 02/10/01 02/01/02 02/04/02 Rapid consolida
Slide 9: Industry Consolidation
Industry Consolidation Gold Fields- Driefontein Placer Dome - MINERALS M&A Barrick-Homestake * Combined Mk Getchell Cap. of BHPB Billiton IPO restructure (Deals above US$1B) merger Billiton increases Rio acquires North Ltd. stake in Worsley BHP merges Newmont acquires Santa Fe Anglo acquires Shell c
Slide 10: Oil and Gas: “less” consolidated but OPEC is vital
Oil and Gas: “less” consolidated but OPEC is vital Oil and gas sector has a Supermajors 15% market value of about Exxon Mobil BP Shell US$1,400 billion, Chevron - Texaco excluding the national oil TFE International companies. OPEC Integrateds 6% Super 43% Independents 2% The five “super-majors” othe
Slide 11: Share price has outperformed peers and the markets since the merger announcement
Share price has outperformed peers and the markets since the merger announcement in March 2001 130 Indexed 1 March 2001 = 100 120 BHP BILLITON +17% RIO TINTO +13% 110 ANGLO AMERICAN +3% ASX200 +2% 100 ALCOA -1% 90 FTSE100 -11% 80 70 60 March 2001 April 2002 Page 11
Slide 12: BHP Billiton Strategic Framework
BHP Billiton Strategic Framework VALUE STRATEGIC PERFORMANCE DRIVERS IMPERATIVES MEASURES Page 12
Slide 13: Our vision…
Our vision… We seek to earn SUPERIOR returns for our shareholders as the world’s PREMIER supplier of natural resources and RELATED products and services Page 13
Slide 14: Value Drivers - What distinguishes us from the rest
Value Drivers - What distinguishes us from the rest I. Outstanding Assets II. Growth From Deep Inventory of Projects III. Customer-Centric Marketing IV. The Portfolio Effect V. The Petroleum CSG VI. Innovation Page 14
Slide 15: Value Driver I: Outstanding Assets
Value Driver - I I. Outstanding Assets Page 15
Slide 16: The Customer Sector Groups
The Customer Sector Groups Petroleum Oil Gas LNG Carbon Steel Energy Coal Operations in Sth Materials Africa, Australia, US, Iron Ore Colombia Coking Coal Manganese Operating Excellence Base Metals and Technical Aluminium Copper Capability Alumina Zinc Aluminium Lead Stainless Steel Materials Nickel
Slide 17: Value Driver I: Outstanding Assets
Value Driver - 1 I. Outstanding Assets Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 1. “Zero harm” 1. Improving HSEC statistics. Community – 1% of pre tax profits. 2. Operating excellence 2. Cut operating costs by 2% p.a. on average for 3 ye
Slide 18: Value Driver II: Growth From Deep Inventory of Projects
Value Driver - II II. Growth From Deep Inventory of Projects Page 18
Slide 19: A deep inventory of growth projects
A deep inventory of growth projects BROWNFIELD Spence Yabulu Escondida R’thorpe Phase IV Alumar Intercor Bayside Mozal 2 Escondida Mining Area C Hillside 3 Norte San Juan Yandi Lump Port NWS CdC 4th Train Dendrobium NWS 5th Train Tintaya Mount Oxide Arthur Nth GoM Infrastr 2002 2003 2004 2005 2006 M
Slide 20: Pursuit of high value growth
Pursuit of high value growth …US$10 billion in growth projects 40 Investment by Business 30 (% of group total in 2002-06) 20 35-40 10 15-20 15 10 10 10 0 Petroleum Base Aluminium Energy Carbon Stainless Metals Coal Steel Steel & Materials Other * Indicative data only Page 20
Slide 21: Value Driver II: Growth From Deep Inventory of Projects
Value Driver - II II. Growth From Deep Inventory of Projects Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 3. Investment judgement. 4. Decide/implement projects (potential US$10B by FY2006) Project management skills. Page 21
Slide 22: Value Driver III: Customer-Centric Marketing
Value Driver -III III. Customer-Centric Marketing Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 4. Serving customers best 5. Preferred supplier status. Global marketing and trading. Page 22
Slide 23: Marketing – a key component of the organisational structure
Marketing – a key component of the organisational structure Strategy, Corporate Governance Portfolio composition, M&A Corporate Centralised Marketing Function Marketing The Singapore Hague CUSTOMER SECTOR GROUPS – the business units Base Carbon Carbon Stainless Stainless Energy Aluminium Aluminium B
Slide 24: Value Driver IV: The Portfolio Effect
Value Driver - IV IV. The Portfolio Effect Page 24
Slide 25: Outstanding Diversification
Outstanding Diversification By Commodity By Geography By Shareholder Customer Sector Group EBIT: Net Operating Assets: Holding: Petroleum 35% Australia 37% Australia 37% Carbon Steel Materials 22% South America 35% UK & Europe 30% Aluminium 13% Southern Africa 20% North America 17% Base Metals 12% E
Slide 26: Cash Flow at Risk
Cash Flow at Risk BHP Billiton EBITDA (Indicative) 5 th Percentile Mean ~$4 billion ~$5 billion ~ US$1 billion CFAR Frequency 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 EBITDA (US$billion) Page 26
Slide 27: Value Driver IV: The Portfolio Effect
Value Driver - IV IV. The Portfolio Effect Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 5. Portfolio management 5. Credit rating of ‘A’ or better. 6. Funding and capital Positive Cash Flow each year. management EBITDA/Interest coverage > 8x.
Slide 28: Value Driver V: The Petroleum CSG
Value Driver - V V. The Petroleum CSG Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 7. Value adding growth 7. Low discovery costs. Growing reserves and production. Page 28
Slide 29: Petroleum’s Industry Ranking
Petroleum’s Industry Ranking Production (MMboe) Oil & Gas and Energy - Market Value (US$M) ExxonMobil ExxonMobil Shell BP Shell TFE Chevron BP Texaco TotalFinaElf ENI Repsol-Ypf ChevronTexaco Phillips ENI Conoco 17th in terms of 9th in terms of Unocal production E.ON Occidental market size Talisman
Slide 30: Value Driver VI: Innovation
Value Driver - VI VI. Innovation Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) 8. Creative thinking. 8. New initiative's as opportunities arise Commercial judgement. Transaction execution. Page 30
Slide 31: We aspire to be one of the world’s premier companies
Our vision… We seek to earn superior returns for our shareholder as the world’s premier supplier of natural resources and related products and services We can do more than this… We aspire to be one of the world’s premier companies Page 31
Slide 32: Value drivers, strategic imperatives and performance measures
VALUE DRIVERS STRATEGIC IMPERATIVES PERFORMANCE MEASURES (What distinguishes us from (What we have to get right) (How the market should judge us) others ) I Outstanding Assets 1. “Zero harm”. 1. Improving HSEC statistics. 2. Operating excellence. Community – 1% of pre tax profits. 2. Cut operating c
BHP Billiton — Securities Institute of Australia, Sydney (April 2002) on 6ix