Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (May 2008)
41 slides from Bhp's merger presentation, May 23, 2008
Slide 1: BHP Billiton – Strength, Stability and Growth
Securities & Derivatives Industry Association Alex Vanselow, Chief Financial Officer May 2008 BHP Billiton – Strength, Stability and Growth Securities & Derivatives Industry Association Alex Vanselow, Chief Financial Officer May 2008 BHP Billiton – Strength, Stability and Growth
Slide 2: Disclaimer
Disclaimer This document has been prepared by BHP Billiton Limited and BHP Billiton Plc (“BHP Billiton") and comprises the written materials/slides for a presentation concerning BHP Billiton's offers for Rio Tinto Limited and Rio Tinto plc (“Rio Tinto”). By reviewing/attending this presentation you
Slide 3: Disclaimer (continued)
Disclaimer (continued) None of the statements concerning expected cost savings, revenue benefits (and resulting incremental EBITDA) and EPS accretion in this presentation should be interpreted to mean that the future earnings per share of the enlarged BHP Billiton group for current and future financ
Slide 4: BHP Billiton – Strength, Stability and Growth
BHP Billiton – Strength, Stability and Growth • Today: The world’s leading diversified mining company • Our past: A proven track record • Our future: The outlook is exciting • The offer for Rio Tinto
Slide 5: Today: The world's leading diversified mining company
Today: The world’s leading diversified mining company
Slide 6: A diversified global portfolio
A diversified global portfolio Stainless Steel Materials #3 global nickel producer Iron Ore #3 global supplier of seaborne iron ore Manganese #1 global supplier of seaborne manganese ore Metallurgical Coal #1 global supplier of seaborne traded metallurgical coal Base Metals #3 global producer of cop
Slide 7: The world's largest diversified natural resources company
The world’s largest diversified natural resources company Sources: Bloomberg, Datastream. a) Rio Tinto undisturbed market cap as at 31-Oct-2007. Top 10 metals and mining companies (Market capitalisation as at 18-Apr-2008, US$bn) Vale Rio Tinto (a) China Shenhua Anglo American Xstrata Norilsk Nickel
Slide 8: Led by an experienced management team
Led by an experienced management team Chairman and Chief Executive Officer Group Management Committee Notes: a) Andrew Mackenzie’s appointment to BHP Billiton was announced on 20-Nov-2007, he has not yet commenced his new role at BHP Billiton. He previously worked at Rio Tinto where he was Chief Exe
Slide 9: Maintaining our commitment to our core strategy
Maintaining our commitment to our core strategy • Large, low-cost, expandable assets • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows • Maintenance of a deep diversified inventory of growth opti
Slide 10: A unique diversified portfolio balanced across high margin commodities
A unique diversified portfolio balanced across high margin commodities Underlying EBITDA (CY2007, 12 months, US$bn) Underlying EBITDA Margin (a) (CY2007, 12 months) Note: Historical financial information has been restated for comparative purposes per note 1 of BHP Billiton’s half-year financial repo
Slide 11: Overriding commitment to ethics, safety, environmental practice and community engagement
Overriding commitment to ethics, safety, environmental practice and community engagement • Sustainable development is fundamental to our success • Our licence to operate depends on responsibly operating our business: – A track record of being valued by our communities will contribute to us being con
Slide 12: Our past: A proven track record
Our past: A proven track record
Slide 13: BHP Billiton invested in growth early to meet demand
BHP Billiton invested in growth early to meet demand Completed projects (US$bn) Source: BHP Billiton and Rio Tinto annual and half-yearly reports. Note: Total represents capital expenditure on completed projects. 1.0 2.1 3.9 13.1 14.6 16.0 22.7 7.2 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008YTD
Slide 14: Most developments have been executed to expectations
Most developments have been executed to expectations, wherever on the globe they are located Notes: a) Selected projects >US$100m and managed by BHP Billiton. Excludes petroleum projects. Performance relative to initial announced US$ budget. b) BHP Billiton provided the latest update for the status
Slide 15: Delivering superior EPS growth for shareholders…
Delivering superior EPS growth for shareholders… Earnings per share (US$ per share) Note: BHP Billiton’s EPS represents reported underlying EPS for the financial year ending 30-June. EPS in FY2002 excludes the results of BHP Billiton’s Steel business which was demerged in July 2002. US$ 0.31 US$ 0.3
Slide 16: … and dividend growth
… and dividend growth, with 12 consecutive ordinary dividend increases 6.5 7.0 16.5 13.5 17.5 20.0 Ordinary dividends per share (US cents per share) Note: Two interim dividends were paid in FY2004 45% increase in interim dividend 13.0 14.5 26.0 28.0 36.0 47.0 29.0 FY2002 FY2003 FY2004 FY2005 FY2006
Slide 17: Creating considerable wealth for shareholders
Creating considerable wealth for shareholders Value at 28 June 2001 A$10,372 Value at 30 June 2003 A$9,098 Value at 30 June 2005 A$19,848 Value at 30 June 2007 A$39,727 BHP Billiton Ltd (a) (A$) Source: Bloomberg, Iress. a) Dividends/distributions assumes that the dividends are reinvested in BHP Bil
Slide 18: Our future: The outlook is exciting
Our future: The outlook is exciting
Slide 19: Chinese growth is driving global materials demand
Chinese growth is driving global materials demand China USA Other Notes: Seaborne iron ore demand based on import statistics - CRU data for 2007, IISI data for 1997. Energy consumption is all uses of coal, gas, oil and nuclear, expressed as millions tonnes of oil equivalent, data not yet available.
Slide 20: ...and industrialisation and urbanisation in China appears to have a long way to go
...and industrialisation and urbanisation in China appears to have a long way to go Finished steel consumption (kg/capita) 1,000 1,200 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP/Capita (Jan 2008 Constant US Dollars) China Germany India Japan Korea, Rep. United States Ta
Slide 21: Sales to China currently represent 20% of BHP Billiton's revenue
Sales to China currently represent 20% of BHP Billiton’s revenue 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 FY02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08 Base Metals Iron Ore SSM Other BHP Billiton revenue from China (US$m) 1,075 1,357 1,588 Europe Japan Oth
Slide 22: India – the journey has begun
India – the journey has begun GDP (US$ billion) BHP Billiton copper equivalent sales volume units (a) (100=FY2002 sales to China) FY 2002 FY 2007 China India 1,000 China India 100% Basis Source: World Bank, Focus Economics, BHP Billiton. a) Note: Converted to copper equivalent units using BHP Billit
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Slide 26: A deep diversified inventory of growth options
A deep diversified inventory of growth options, many of which are brown field expansions NWS Nth Rankin B Boffa/Santou Refinery As at 29 February 2008 Proposed capital expenditure <$500m $501m-$2bn $2bn+ SSM Energy Coal D&SP Iron Ore Base Metals Petroleum Met Coal CSG Manganese Aluminium Execution P
Slide 27: BHP Billiton has an attractive growth profile of significant scale
BHP Billiton has an attractive growth profile of significant scale 2,000 4,000 6,000 8,000 10,000 12,000 14,000 CY07 CY08 CY09 CY10 CY11 CY12 (Copper Equivalent Tonnes '000s) Production in copper equivalent tonnes BHP Billiton Rio Tinto Note: Copper equivalent units calculated using BHP Billiton (BH
Slide 28: Example: Carbon steel materials
Example: Carbon steel materials Diversified exposure to steel demand growth Manganese (b) Iron Ore (c) Metallurgical Coal (a) JFY2003 JFY2004 JFY2005 JFY2006 JFY2007 JFY2008 • BHP Billiton has leading global positions in the three core raw materials for steel production – #1 global supplier of seabo
Slide 29: Example: Petroleum
Example: Petroleum An E&P player with the power and reach of a super-major Market capitalisation (US$ bn April 2007) • Credibility and stature that Petroleum could not secure in its own right • A unique offer to major resource holder governments, NOC’s and other potential partners – The corporate st
Slide 30: The offer for Rio Tinto
The offer for Rio Tinto
Slide 31: Overlapping mineral basin positions. US$3.7bn of synergies
Overlapping mineral basin positions. US$3.7bn of synergies Selected existing BHP Billiton and Rio Tinto assets, projects and concessions.
Slide 32: Summary of the offer for Rio Tinto
Summary of the offer for Rio Tinto • BHP Billiton has made a pre-conditional offer for Rio Tinto, it will be capable of acceptance by shareholders following regulatory approvals • The offer is being made direct to the shareholders of Rio Tinto • Rio Tinto shareholders are being offered 3.4 BHP Billi
Slide 33: BHP Billiton and Rio Tinto's share prices have been strongly correlated
BHP Billiton and Rio Tinto’s share prices have been strongly correlated, with BHP Billiton outperforming BHP Billiton Ltd and Rio Tinto Ltd TSR (a) (Index: Jun-2001 = 100) BHP Billiton Ltd vs Rio Tinto Ltd relative performance (b) (Price performance relative to Jun-2001 = 100) Source: IRESS. a) For
Slide 34: 3.4:1 represents a 45% premium
3.4:1 represents a 45% premium Source: Datastream (as of 18-Apr-08). a) Exchange ratio assumes 100% BHP Billiton Ltd shares for each Rio Tinto Ltd share and BHP Billiton shares for each Rio Tinto plc share consisting of 80% BHP Billiton Plc shares and 20% BHP Billiton Ltd shares. b) Pre-approach sha
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Slide 36: Conclusion – Strength, stability and growth
Conclusion – Strength, stability and growth • The core strategy remains unchanged • Focused on producing volumes from low cost assets • BHP Billiton on a standalone basis has a bright future • A combination of BHP Billiton and Rio Tinto can generate substantial additional value for shareholders – we
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Slide 39: Appendix: Marius Kloppers Profile
Appendix: Marius Kloppers Profile Marius Kloppers – Chief Executive Officer Age: Professional qualifications: • BE (Chem), MBA, PhD (Materials Science) • Bachelor of Chemical Engineering (University of Pretoria (South Africa)) • PhD from Massachusetts Institute of Technology (MIT) (USA) • MBA from I
Slide 40: Appendix: Alex Vanselow Profile
Appendix: Alex Vanselow Profile Alex Vanselow – Chief Financial Officer Age: Professional qualifications: BComm, Wharton AMP Previous BHP Billiton positions: Alex Vanselow joined the Group in 1989 and was appointed President Aluminium in March and appointed Chief Financial Officer in March 2006. He
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