Slide 1: Preliminary Results – 30 June 2008
Preliminary Results – 30 June 2008 18 August 2008 Marius Kloppers Chief Executive Officer Alex Vanselow Chief Financial Officer
Slide 2: Disclaimer
Disclaimer Preliminary Results By viewing this presentation you agree to be bound by the following conditions. The directors of BHP Billiton Limited and BHP Billiton Plc (“ BHP Billiton ") accept responsibility for the information contained in this presentation. Having taken all reasonable care to e
Slide 3: Disclaimer continued
Disclaimer continued Preliminary Results Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to, BHP Billiton's ability to successfully combine the businesses of BHP Billiton and Ri
Slide 4: Disclaimer continued
Disclaimer continued Preliminary Results Information for US Holders of Rio Tinto Limited Shares BHP Billiton Limited is not required to, and does not plan to, prepare and file with the SEC a registration statement in respect of the Rio Tinto Limited Offer. Accordingly, Rio Tinto Limited shareholders
Slide 5: Preliminary Results – June 2008
Preliminary Results – 30 June 2008 Marius Kloppers Chief Executive Officer
Slide 6: Overview – Year ended June 2008
Overview – Year ended June 2008 Preliminary Results • HSEC • Outstanding operating and financial results – Annual production records set in 7 commodities – Underlying EBITDA up 22% to US$28.0 billion – Underlying EBIT up 21% to US$24.3 billion – Attributable profit of US$15.4 billion, up 12% – Earni
Slide 7: Preliminary Results – June 2008
Preliminary Results – 30 June 2008 Alex Vanselow Chief Financial Officer
Slide 8: 2008 Financial highlights
2008 Financial highlights Preliminary Results 2007 % Change Year ended June (US$m) Revenue 59,473 47,473 25.3 Underlying EBITDA 28,031 22,950 22.1 Underlying EBIT 24,282 20,067 21.0 Attributable profit (excluding exceptionals) 15,368 13,675 12.4 Attributable profit 15,390 13,416 14.7 Net operating c
Slide 9: Diversity = Stability and Strength
Diversity = Stability and Strength Preliminary Results % EBIT Margin (1) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 Petroleum Aluminium Base Metals D&SP SSM Iron Ore Manganese Met Coal Energy Coal BHP Billiton (1) FY2002 to FY2005 are calculated under
Slide 10: Underlying EBIT by Customer Sector Group: Petroleum
Underlying EBIT by Customer Sector Group 2008 Neptune Petroleum 5,489 3,014 +82.1 • Record EBIT and production • Operating cash costs held under US$5 per BOE • 3 new major projects commissioned and volume growth expected to continue • Strong operational performance - Stybarrow continued to produce a
Slide 11: Underlying EBIT by Customer Sector Group: Aluminium, Base Metals
Underlying EBIT by Customer Sector Group 2008 Worsley Escondida Aluminium 1,465 1,856 -21.1 Base Metals 7,989 6,875 +16.2 2007 % Change Year ended June (US$m) • Record alumina production • South African power situation will continue to impact metal production • Worsley E&G approved • Record copper p
Slide 12: Underlying EBIT by Customer Sector Group: Diamonds, Stainless Steel
Underlying EBIT by Customer Sector Group Ekati 2008 Ravensthorpe Diamonds & Specialty Products -4.1 2007 % Change Year ended June (US$m) • Koala Underground ramping up strongly • Anglo Potash acquisition adding flexibility for future growth Stainless Steel Materials 1,275 3,675 -65.3 • EBIT impacted
Slide 13: Underlying EBIT by Customer Sector Group: Manganese, Iron Ore
Underlying EBIT by Customer Sector Group 2008 Mount Newman GEMCO Manganese 1,644 +549.8 Iron Ore 4,631 2,728 +69.8 2007 % Change Year ended June (US$m) • Record production due to successful project execution • Exceptional local currency cost control at Western Australia Iron Ore • Strong volume grow
Slide 14: Underlying EBIT by Customer Sector Group: Coal
Underlying EBIT by Customer Sector Group 2008 Illawarra Coal Hunter Valley Coal Metallurgical Coal 1,247 -24.9 2007 % Change Year ended June (US$m) • Strong recovery from flood impacts in Queensland • Costs impacted by recovery activities • Great outlook for margins • Market remains tight • Growth p
Slide 15: Cash cost increase mostly recouped in revenue
Cash cost increase mostly recouped in revenue Maintenance US$m People Fuel & Energy Shipping & Freight Raw Materials QCoal Rain Impact CMSA Strike (225) + + + - = (1) Excluding non-cash costs of US$216m (mostly depreciation on growth capital). KNS Furnace Rebuild Recouped in Revenue $645m Investment
Slide 16: High capture of price benefit to EBIT
High capture of price benefit to EBIT 64% 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 FY2007 EBIT Net Price Variance Price to EBIT FY2008 EBIT 20,067 US$m 6,559 4,215 (1) (1) Net price variance includes the impact of price-linked costs. Price-linked
Slide 17: Strong Return On Capital Employed despite record capital investments
Strong Return On Capital Employed despite record capital investments FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 0% 5% 10% 15% 20% 25% 30% 35% 40% Capex (LHS) Capitalised Exploration (LHS) Acquisitions (LHS) ROCE (RHS) Capital and exploration expenditure (US$bn) ROCE Notes: FY2002 to FY2005 are
Slide 18: Delivering superior returns to shareholders
Delivering superior returns to shareholders Ordinary dividends per share (US cents per share) FY2005 FY2006 FY2007 FY2008 H1 H2 FY2005 FY2006 FY2007 FY2008 Earnings per share (US cents per share) Note: BHP Billiton’s EPS represents reported underlying EPS for the financial year ending 30 June. CAGR
Slide 19: Preliminary Results – June 2008
Preliminary Results – 30 June 2008 Marius Kloppers Chief Executive Officer
Slide 20: Outstanding results driven by strategy and execution
Outstanding results driven by strategy and execution 9.6 14.7 3.1 3.5 5.5 9.9 15.3 20.1 24.3 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Notes: a) FY2002 to FY2005 calculated on the basis of UKGAAP. Subsequent periods calculated under IFRS. Underlying EBIT (a) (US$bn) H2 H1
Slide 21: A track record of project delivery
A track record of project delivery • Projects successfully delivered: – 44 since the DLC merger – 10 completed in FY2008 • 10% growth estimated in FY2009 • Completed projects ramping up in FY2009 – Atlantis South, Genghis Khan, Samarco, Ravensthorpe/Yabulu Exp., Cliffs, Koala Underground, Spence, Es
Slide 22: Our portfolio is diversified and balanced across high margin commodities
Our portfolio is diversified and balanced across high margin commodities Underlying EBIT Margin (a) (FY2008) Notes: a) EBIT Margin excludes third party trading activities. 67% 30% 31% 62% 20% 25% 24% 48% 51% 58% Underlying EBIT (FY2008, US$bn) Energy (27%) Non Ferrous (44%) Steelmaking Materials (29
Slide 23: Short-term global challenges exist
Short-term global challenges exist • Global economic activity is moderating • Financial market instability, housing market decline and inflationary pressures • Emerging economies not immune – Inflationary pressures – Some decline in fixed asset investment growth (isolated to a small number of indust
Slide 24: Long-term fundamentals of emerging/developing economies remain intact
However, long-term fundamentals of emerging/developing economies remain intact Source: World economic outlook database, April 2008. IMF world GDP growth (%) 2.8% 2.3% 1.3% 2.9% 3.5% 6.4% 6.7% 7.0% 9.8% 10.1% 9.4% 10.1% 0% 2% 4% 6% 8% 10% 12% Average historical growth CY1990-CY2000 Average historical
Slide 25: Domestic consumption and investment continues to drive China's economy
Domestic consumption and investment continues to drive China’s economy Source: CEIC. Source: McKinsey Global Institute, March 2008 – ““Preparing for China’s Urban Billion”. • Chinese economic growth is predominantly domestically driven • Long-term China economic growth is driven by continued urbanis
Slide 26: Urbanisation and industrialisation drive demand for steelmaking raw materials
Urbanisation and industrialisation has resulted in a huge call on steelmaking raw materials CY1970 CY1980 CY1990 CY2000 CY2007 CY2015E United States China Source: International Iron & Steel Institute (World Steel in Figures, 2008), US Geological Survey (Iron and Steel Statistics, 3 January 2008) and
Slide 27: The impact is also being felt in the energy markets
The impact is also being felt in the energy markets 36% 9% 5% 50% 10% 17% 30% 26% 30% 27% 30% 31% China Other Europe North America Share of world primary energy consumption (mmtoe) Growth in energy consumption CY2000-2007 (mmtoe) 0% 100% CY2000 CY2007 Other Europe North America China Source: BP Stat
Slide 28: Supply-side constraints are limiting the industry's response
Supply-side constraints are limiting the industry’s response Existing Supply Future Supply Growth • Equipment stress • Industrial action and wage disputes • Labour shortages • Equipment shortages • Significant cost pressures, including fuel • Energy and power constraints • Declines in ore-grade leve
Slide 29: Existing supply: Equipment shortages are continuing
Existing supply: Equipment shortages are continuing CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 Tyres and Trucks Draglines & Shovels Ammonium Nitrate Grinding Mills Tyres (2004) • OEM underinvestment • Radial tyre market undersupply >30% Trucks (2007) • Access to castings, forgings • Effect of non-min
Slide 30: Future industry supply growth: New projects are encountering delays
Future industry supply growth: New projects are encountering delays Source: Brook Hunt. Note: “Forecast production as at 2008 Q2” represents the expected future production as at 2008 Q2 from those copper developments classified as highly probable and probable as at 2006 Q1. It excludes new developme
Slide 31: Resourcing the Future – BHP Billiton's response
Resourcing the Future – BHP Billiton’s response Port Hedland • BHP Billiton has not been immune from supply constraint issues • But our scale, global presence and diversification provides significant competitive advantages • We are focused on the disciplined execution of the core strategy • And on p
Slide 32: Accelerating growth from a diversified portfolio of projects
Accelerating growth from a diversified portfolio of projects 45% 37% 18% 2,000 4,000 6,000 8,000 10,000 12,000 14,000 CY2007 CY2008 CY2009F CY2010F CY2011F CY2012F % of growth CY2007-2012 (Estimated & unrisked) Note: Growth in production volumes on a copper equivalent units basis between CY2007 and
Slide 33: Focused on low risk volume growth from existing assets
Focused on low risk volume growth from existing assets, high margin CSGs and known regions 87% 13% 88% 12% 3% 97% 63% 37% By project type (b) Brownfield Greenfield By region (c) Existing New By country risk (d) Lower Higher By high margin vs lower margin CSGs (e) > 50% < 50% Projected growth in prod
Slide 34: And lower risk longer term options
And lower risk longer term options 35% 65% 87% 13% By project type (b) Brownfield Greenfield By region (c) Existing New Projects in pre-feasibility or future option stage of development (~US$90bn) (a) Notes: a) Based on current BHP Billiton estimates of future capital expenditure for projects in the
Slide 35: Unlocking further value through a combination with Rio Tinto
Unlocking further value through a combination with Rio Tinto • Optimising mineral basin positions and infrastructure – Lower cost, more efficient production – Unlocking volume through matching reserves with infrastructure • Enhanced platform for future growth – Deployment of scarce resources to high
Slide 36: Summary
Summary Liverpool Bay • Excellent operating and financial results • Long-term demand outlook remains strong despite some short-term economic uncertainty • Supply-side constraints are limiting the ability for the industry to respond to demand growth • BHP Billiton’s portfolio of assets focused in sta
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Slide 39: Return on capital and margins
Return on capital and margins (1) FY2005 toFY2008 are shown on the basis of IFRS. Prior periods are calculated under UKGAAP. All periods exclude third party trading. 35% 38% 38% 44% 48% 48% 29% 21% 13% 11% 40% 30% 24% 20% 0% 10% 20% 30% 40% 50% 60% FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Re
Slide 40: Rate of cost increase
Rate of cost increase FY2005 is shown on the basis of UKGAAP. Other periods are calculated under IFRS. All periods exclude third party trading and non cash costs. 0% 1% 2% 3% 4% 5% 6% 7% FY2005 FY2006 FY2007 FY2008 Other Costs Raw Materials Fuel & Energy Operating cost increase relative to preceding
Slide 41: Underlying EBIT analysis Year ended June vs June
Underlying EBIT analysis Year ended June 08 vs June 07 5,000 10,000 15,000 20,000 25,000 30,000 Jun-07 Net Price Volume Exchange Inflation Cash Costs Non Cash Costs Exploration & Bus Dev Other Jun-08 US$m 20,067 6,559 1,828 (1,133) (532) (967) (216) (404) (920) 24,282 (1) Including $134m of price-li
Slide 42: Impact of major volume changes
Impact of major volume changes Year ended June 08 vs June 07 -400 -200 1000 1200 1400 US$m Total volume variance US$1,828 million Petroleum Met Coal (47) Iron Ore Aluminium/ Alumina D&SP Energy Coal Copper Nickel (313) Other (1) Volume variances calculated using previous year margin and includes new
Slide 43: Impact of major commodity price changes
Impact of major commodity price Year ended June 08 vs June 07 -1500 -1000 -500 1000 1500 2000 2500 Total price variance US$6,559 million (1) US$m Petroleum 1,684 Copper Manganese 1,465 Iron Ore 2,134 Energy Coal 1,062 Nickel (1,066) Diamonds Aluminium (51) Met Coal (1) Net of $134m of price-linked c
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Slide 46: Strong cash flow - delivering value to shareholders
Strong cash flow - delivering value to shareholders 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 H1 H2 1500 3000 4500 6000 7500 9000 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Available Cash Flow Available Cash Flow Organic
Slide 47: Capital & exploration expenditure
Capital & exploration expenditure 0.0 3.0 6.0 9.0 12.0 15.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Exploration Sustaining Capex Growth Expenditure US$bn (1) FY2009 includes US$700m for Petroleum F FY2002 to FY2005 are shown on the basis of UKGAAP. Subsequent periods are calculated u
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Slide 52: Maintenance of a deep diversified inventory of growth options
Maintenance of a deep diversified inventory of growth options Preliminary Results Boffa/Santou Refinery As at 14 August 2008 Proposed capital expenditure $500m $501m-$2bn $2bn+ SSM Energy Coal D&SP Iron Ore Base Metals Petroleum Met Coal CSG Manganese Aluminium 2009 Execution Pyrenees Alumar Atlanti
Slide 53: Sanctioned development projects (US$12.4bn)
Sanctioned development projects (US$12.4bn) Production Capacity (100%) Progress Initial Production Target Date Share of Approved Capex US$m Commodity Minerals Projects On schedule and budget 1-2 million tpa Mid CY09 Met Coal Maruwai Stage 1/Haju (Indonesia) – 100% On schedule and budget Third coal b
Slide 54: Sanctioned development projects (US$12.4bn) cont.
Sanctioned development projects (US$12.4bn) cont. Production Capacity (100%) Progress Initial Production Target Date Share of Approved Capex US$m Commodity Petroleum Projects On schedule and budget 2,500 million cubic feet gas per day CY12 LNG NWS North Rankin B (Australia) – 16.67% On schedule and
Slide 55: Development projects in feasibility (US$12.4bn)
Development projects in feasibility (US$12.4bn) Project Capacity (100%)* Forecast Initial Production* Estimated Share of Capex* US$m Commodity Minerals Projects (US$4.7bn) Note: All projects in feasibility remain under review until they are approved to move to execution. During the feasibility phase
Slide 56: Development projects in feasibility: Petroleum Projects
Development projects in feasibility (US$12.4bn) Project Capacity (100%)* Forecast Initial Production* Estimated Share of Capex* US$m Commodity Petroleum Projects (US$600m) * Indicative only 280 million cubic feet gas per day H1 CY11 Gas Angostura Gas (Trinidad & Tobago) – 45% 60,000 barrels of oil a