Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — FY2005 Earnings Presentation
46 slides from Bhp's earnings presentation, Aug 24, 2005
Slide 1: Preliminary Results – 30 June 2005
Preliminary Results – 30 June 2005 24 August 2005 Chip Goodyear Chief Executive Officer Chris Lynch Chief Financial Officer
Slide 2: Disclaimer
Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation ha
Slide 3: Preliminary Results – 30 June 2005
Preliminary Results – 30 June 2005 Chip Goodyear Chief Executive Officer
Slide 4: Highlights – year ended June 2005
Highlights – year ended June 2005 • HSEC – 12 month rolling Classified Injury Frequency Rate at 3.9, improvement of 21% • Record full year earnings − EBITDA up 53% to US$11.4 billion − EBIT up 70% to US$9.3 billion − Attributable profit of US$6.5 billion and earnings per share of 106.4 US cents, up
Slide 5: Preliminary Results – 30 June 2005
Preliminary Results – 30 June 2005 Chris Lynch Chief Financial Officer
Slide 6: Results highlights
Results highlights Year ended June (US$M) 2005 2004 % Change Turnover (1) 31,804 24,943 +28 EBITDA (1)(2) 11,446 7,506 +53 EBIT (1)(2) 9,330 5,488 +70 Attrib profit (1)(2) 6,512 3,510 +86 Exceptional items (114) (131) Attrib profit (incl exceptionals) (1) 6,398 3,379 +89 Available cash flow (1) 8,68
Slide 7: EBIT by Customer Sector Group
EBIT by Customer Sector Group Year ended June (US$M) 2005 2004 % Change % Change Petroleum 1,830 1,391 +32 Aluminium 977 776 +26 Base Metals 2,177 1,156 +88 Carbon Steel Materials 2,821 1,137 +148 Diamonds & Spec Products 498 446 +8 Exploration & Technology (81) (36) Energy Coal 616 234 +163 Stainle
Slide 8: Impact of major volume changes on EBIT (at FY04 margins)
Impact of major volume changes on EBIT (at FY04 margins) Year ended June 2005 vs year ended June 2004 US$M Copper New Business 160 Iron Ore 130 117 120 105 Aluminium 80 40 Coking Coal Manganese Other 35 40 13 5 5 0 ROD WM C M ad Dog -40 Angostura Diamonds M inerva -80 (60) Ohanet -120 Petroleum -160
Slide 9: Cost impact on EBIT
Cost impact on EBIT Year ended June 2005 vs year ended June 2004 US$M Total cost variance - US$(775) million 150 Cost Efficiencies 100 100 50 0 -50 Distribution & Acctg Grade Business Demurrage Treatment -100 Fuel & Development (50) (50) /Field Other Energy Decline (60) Maintenance (80) (95) Raw (11
Slide 10: Cost and revenue improvement initiatives
Cost and revenue improvement initiatives Year ended June 2005 US$M 500 200 435 400 300 135 200 100 100 0 Cost Efficiency Cost Mitigation Revenue Total Benefits Enhancement Preliminary Results Slide 10 24 August 2005
Slide 11: Net interest, taxation and attributable profit
Net interest, taxation and attributable profit Year ended June (US$M) 2005 2004 EBIT 9,330 5,488 Net interest expense (330) (355) Exchange impact on debt (1) (133) Discounting of provisions/Capitalised interest (90) (14) Profit before tax 8,909 4,986 Tax expense (2,331) (1,317) Exchange impact on ta
Slide 12: Cash flow
Cash flow Year ended June (US$M) 2005 2004 Operating cash flow and JV dividends 10,883 6,769 Net interest paid (500) (332) Tax paid (1,695) (1,337) Available cash flow 8,688 5,100 Capital expenditure (3,831) (2,589) Exploration expenditure (533) (454) Sale of fixed assets & investments 903 211 Acqui
Slide 13: Preliminary Results – 30 June 2005
Preliminary Results – 30 June 2005 Chip Goodyear Chief Executive Officer
Slide 14: Outlook - 2005
Outlook - 2005 USA China Improvements in consumer spending, industrial production GDP growth rate remains strong and sustainable and employment Fixed asset investment focussed on infrastructure Tightening in monetary policy de-bottlenecking High oil prices not impacting growth RM B revaluation neutr
Slide 15: Commodity price cycle – 200 year view
Commodity price cycle – 200 year view US Commodity Price Index adjusted for CPI 1.70 WWI 1.50 Rise of electric Industrial Revolution/ power and Steam power communications 1.30 War of Post WWII Vietnam & 1812 Cold War 1.10 Post Civil War 0.90 Illiquidity/ Rise of the Contraction of service economy 0.
Slide 16: Volume growth
Volume growth Year ended June 2001 to year ended June 2005 60% 50% 40% 30% 20% 10% 0% Natural Aluminium Alumina Copper S ilver Lead Iron Ore Met Coal Mn Ore Mn Alloy Nickel Gas Preliminary Results Slide 16 24 August 2005
Slide 17: Deep inventory of growth projects
Deep inventory of growth projects BROW NFIELD Koala UG NWS NWS T5 T5 BMA Phase 2 Atlantis North NWS Samarco Samarco Angel Paranam Yabulu Yabulu Esc’da Esc’da Worsley Sulphide Sulphide BMA Esc’da Phase 1 WA WA Iron Iron Ore Ore WA WA Iron Ore CPR Iron Ore WA WA Iron Iron Ore Ore RGP RGP 4+ 4+ RGP RGP
Slide 18: WMC creates further growth options
WMC creates further growth options • 100% ownership achieved 2 August 2005 • Integration proceeding on schedule • Olympic Dam expansion in Pre-Feasibility • Focus to optimise current nickel system • Ongoing WA nickel exploration • ‘Gems’ identified for use in BHP Billiton Preliminary Results Slide 1
Slide 19: Summary and conclusions
Summary and conclusions • Strong production performance leading to record financial results • Outlook remains positive − Strong demand − Low inventories − Supply lagging demand • Portfolio diversification drives cash flow stability • Track record of delivering growth in line with market demand • Man
Slide 20: Appendix
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Slide 21: EBIT analysis
EBIT analysis Year ended June 2005 vs year ended June 2004 US$M 12,000 5,665 (565) 11,000 (465) (235) (775) 10,000 157 9,330 (190) 110 140 9,000 8,000 7,000 6,000 5,488 5,000 Net Price Impact 4,000 US$5,100m 3,000 2,000 1,000 0 Year Ended Price Price Exchange Inflation Costs Ceased & Volumes New Oth
Slide 22: Outstanding assets: Increasing margins and return on capital
Outstanding assets Increasing margins and return on capital Return on Capital EBIT Margin 40% 37% 35% 32% 30% 30% 24% 25% 20% 21% 20% 15% 13% 11% 10% 5% 0% 2002 2003 2004 2005 Preliminary Results EBIT margins exclude exceptional items and third party products, refer to slide 44 for more details. Sli
Slide 23: Outstanding assets: EBIT margin growth by Customer Sector Group
Outstanding assets EBIT margin growth by Customer Sector Group 2003 2004 2005 60% 50% 40% 30% 20% 10% 0% Petroleum Aluminium Base Metals Carbon Steel Diamonds & Energy Coal Stainless Materials Specialty Steel Products Materials Preliminary Results EBIT margins exclude exceptional items and third par
Slide 24: EBIT growth since July 2001
EBIT growth since July 2001 US$bn 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 H1 H2 H1 H2 H1 H2 H1 H2 FY2002 FY2003 FY2004 FY2005 Preliminary Results Slide 24 24 August 2005
Slide 25: Impact of commodity price changes on EBIT
Impact of commodity price changes on EBIT Year ended June 2005 vs year ended June 2004 US$M Total price variance + US$5,665million 1000 Iron Ore M et Coal 934 914 Copper 900 862 Petroleum 800 773 700 Thermal Coal 600 553 M anganese 500 468 Ali Other 400 340 Base M etals Nickel 300 244 229 Diamonds 2
Slide 26: Capital expenditure
Capital expenditure US$ Billion 2002 2003 2004 2005 2006F Growth 1.9 2.0 1.8 2.6 4.0 (1) 2006 forecast is US$390m Sustaining 0.9 0.7 0.8 1.2 1.4 Petroleum and US$160m Minerals Exploration (1) 0.4 0.3 0.5 0.5 0.6 (2) Does not include WMC acquisition Total 3.2 3.0 3.1 4.3 (2) 6.0 (2) US$bn 6.0 Explora
Slide 27: Asset disposals since July 2001
Asset disposals since July 2001 Proceeds from sale of assets (US$M) FY2005 1,035 FY2004 277 FY20031 2,472 FY2002 845 Total proceeds 4,629 (1) Includes BHP Steel demerger and BHP Steel loans (net of cash disposed and costs) Preliminary Results Slide 27 24 August 2005
Slide 28: China
China • Sales into China increasing but diversification remains • Currently 12.6% of total company revenues, up from 9.8% in FY04 US$M 2,500 2,407 ROW 2,250 Australia Europe 2,000 China 1,750 1,588 1,500 Nth America Other Asia Japan 1,357 1,250 1,075 1,000 785 750 431 500 371 250 0 FY02 H1 03 H2 03
Slide 29: Financial flexibility: % gearing
Financial flexibility 40 44 Target gearing range 35 36 30 25 % gearing 28 20 15 20 10 12 5 0 4 2001 2002 2003 2004 2005 Gearing (LHS) Average borrowing cost (%) (RHS) EBITDA interest cover (times) (RHS) Moody’s Investment A3 A2 A1 A1 Services Standard & Poor’s A- A A+ A+ Average borrowing cost = gro
Slide 30: Growth projects delivered since July 2001
Growth projects delivered since July 2001 Ekati * / Panda Typhoon, Mad Dog & Zamzama Pipelines Ohanet PACE Mt Arthur & ROD North Angostura Aluminium Base M etals San Juan Cerrejon * Carbon Steel Energy Coal Mozal II Diamonds Antamina Petroleum Area C Tintaya NWS T4 Dendrobium Oxide Hillside III Esco
Slide 31: Sanctioned development projects (US$5.75 bn)
Sanctioned development projects (US$5.75 bn) Share of Initial Minerals Projects Commodity Capex Production Production Capacity Progress US$M Target Date Paranam refinery expansion Increase capacity to 2.2 On time and Alumina 29 Q3 CY05 (Suriname) – 45% million tpa (100%) budget Worsley development c
Slide 32: Sanctioned development projects (US$5.75 bn) cont.
Sanctioned development projects (US$5.75 bn) cont. Share of Initial Minerals Projects Commodity Capex Production Production Capacity Progress cont. US$M Target Date On time. Cost Nickel 1,050 Q2 CY07 Up to 50,000 tpa contained Ravensthorpe (Australia) – 100% nickel in concentrate review underway On
Slide 33: Development projects in feasibility: Minerals (US$4.29 bn)
Development projects in feasibility Minerals (US$4.29 bn) Estimated Share of Forecast Initial Project Commodity Project Description Capex* Production* US$M Alumar Refinery Expansion (Brazil) Alumina <400 Q1 CY08 2 million tpa (100%) – 36% Escondida Coarse Particle Copper 95 Q3 CY07 50,000 tpa (100%)
Slide 34: Development projects in feasibility: Petroleum (US$1.85 bn)
Development projects in feasibility Petroleum (US$1.85 bn) Estimated Share of Forecast Initial Project Commodity Project Description Capex* Production* US$M Zamzama Phase 2 (Pakistan) – 150 m illion cubic feet gas per day Gas 35 Q3 CY07 38.5% per day (100%) Atlantis North (USA) – 44% Oil/Gas 130 Q1
Slide 35: Development projects commissioned since July 2001
Development projects commissioned since July 2001 Our Share of Capex Initial Production Date Project Budget Actual Budget Actual US$M US$M US$M US$M Antamina (Peru) – 33.75% 775 752 Q2 CY01 Q2 CY01 Typhoon (USA) – 50% 128 114 Q3 CY01 Q3 CY01 Tintaya Oxide (Peru) – 99.9% 138 120 Q2 CY02 Q2 CY02 Escon
Slide 36: Development projects commissioned since July 2001 cont.
Development projects commissioned since July 2001 cont. Our Share of Capex Initial Production Date Project Budget Actual Budget Actual US$M US$M US$M US$M Zamzama (Pakistan) – 38.5% 40 40 Q3 CY03 Q2 CY03 Area C (Australia) – 85% 181 171 Q4 CY03 Q3 CY03 M t Arthur North (Australia) – 100% 411 380 Q4
Slide 37: Development projects commissioned since July 2001 cont.
Development projects commissioned since July 2001 cont. Our Share of Capex Initial Production Date Project Budget Actual Budget Actual US$M US$M US$M US$M WA Iron Ore accelerated expansion 83 80 Q2 CY04 Q2 CY04 (Australia) – 85% NWS Train 4 (Australia) – 16.7% 247 252 M id CY04 M id CY04 ROD (Algeri
Slide 38: Development projects commissioned since July 2001 cont.
Development projects commissioned since July 2001 cont. Our Share of Capex Initial Production Date Project Budget Actual Budget Actual US$M US$M US$M US$M Angostura (Trinidad) – 45% 327 337 End CY04 Jan 2005 Dendrobium (Australia) – 100% 200. (1) 200 M id CY05 April 2005 Panda Underground (Canada) –
Slide 39: Impact of restatements of net monetary liabilities
Impact of restatements of net monetary liabilities Year ended June Impact of Impact of (US$M) 2005 Restatement(1) 2004 Restatement(1) EBIT 9,330 (100) 5,488 (60) Net interest (421) (1) (502) (133) Taxation expense (2,215) 61 (1,379) (85) Attributable profit 6,512 (40) 3,510 (278) US$6,552m US$3,788m
Slide 40: USD functional currency policy - general level of exposure
USD functional currency policy - general level of exposure (US$M) AUD Rand Impact Net payables, receivables & (1,000) (250) EBIT employee provisions Resource Rent Tax provision (350) - EBIT Tax provisions (600) (500) Tax Debt - (50) Interest Total (1,950) (800) P&L Restoration & Rehab (1,350) (750)
Slide 41: Key net profit sensitivities
Key net profit sensitivities Approximate impact* on FY06 net profit after tax (US$M) of changes of: US$1/t on iron ore price 60 US$1/bbl on oil price 40 US$1/t on metallurgical coal price 20 USc1/lb on aluminium price 20 USc1/lb on copper price 20 US$1/t on energy coal price 20 USc1/lb on nickel pri
Slide 42: Key net profit sensitivities
Key net profit sensitivities Approximate impact on FY06 net profit after (US$M) tax of changes of: Australian Dollar (USc1/A$) Operations(1) 55 Net monetary liabilities(2)(3) 25 South African Rand (0.2 Rand/US$) Operations(1) 40 Net monetary liabilities(2)(3) 25 Rand debt(2) 2 (1) Impact based on av
Slide 43: Preliminary results under Australian GAAP
Preliminary results under Australian GAAP Year ended June (US$M) 2005 2004 Revenue from ordinary activities 31,045 23,513 Profit before tax 8,481 4,369 Profit after tax attributable to members 6,009 3,403 EPS (US cents) 98.1 54.7 Preliminary Results Slide 43 24 August 2005
Slide 44: Non GAAP measures used within this presentation
Non GAAP measures used within this presentation EBITD A EBITD A is earnings before in terest and tax, from contin uin g operatio ns (except 2001 which includes Steel), before deprecia tion, amortisation and impairments of Group companie s and join t ventures and associates, as detaile d belo w. We b
Slide 45: Non GAAP measures used within this presentation
Non GAAP measures used within this presentation EBIT margin by Customer Sector Group exclu din g third party product activities Slide 23 refers to Customer Sector Group EBIT margins, excludin g third party product activities, as detailed belo w. We belie ve that this provid es useful information but
Slide 46: Ohpoilliton
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