Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — H1 FY2015 Earnings Presentation
35 slides from Bhp's earnings presentation, Feb 24, 2015
Slide 1: Interim results 2015 financial year
Port Hedland Interim results 2015 financial year bhpbilliton resourcing the future Andrew Mackenzie Chief Executive Officer Peter Beaven Chief Financial Officer 24 February 2015
Slide 2: Disclaimer
Disclaimer bhpbilliton resourcing the future Forward-looking statements This release 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 divestm
Slide 3: Interim results 2015 financial year - Andrew Mackenzie
Escondida Interim results 2015 financial year bhpbilliton resourcing the future Andrew Mackenzie Chief Executive Officer 24 February 2015
Slide 4: Delivering on our commitments
Delivering on our commitments bhpbilliton resourcing the future We continue to realise substantial productivity gains Our plans are flexible and we have reduced investment while preserving long-term value We have increased free cash flow to US$4.1 billion despite weaker prices We have strengthened o
Slide 5: Safety is paramount
Safety is paramount bhpbilliton resourcing the future Total Recordable Injury Frequency (TRIF) (number of recordable injuries per million hours worked) 10 8 6 4 2 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 H1 FY15 down 54% Interim results, 24 February 2015 Slide 5
Slide 6: Robust financial results
Robust financial results bhpbilliton resourcing the future Underlying EBITDA of US$14.5 billion, down 12% Underlying attributable profit of US$5.4 billion, down 31% Net operating cash flow of US$10.4 billion, down 12% Capital and exploration expenditure1 of US$6.4 billion, down 23% Free cash flow of
Slide 7: Interim results 2015 financial year - Peter Beaven
Angostura Interim results 2015 financial year bhpbilliton resourcing the future Peter Beaven Chief Financial Officer 24 February 2015
Slide 8: Focusing on the factors we control
Focusing on the factors we control bhpbilliton resourcing the future Underlying EBIT variance (US$ billion) 15.0 Uncontrollable (-US$5.9 billion) Controllable (+US$2.7 billion) 12.4 1.8 0.2 10.0 9.2 1.4 0.5 (0.9) (0.3) 0.6 6.5 (6.1) (0.4) 5.0 0.0 Fuel & energy Non-cash H1 FY14 Price1 Exchange Inflat
Slide 9: Petroleum & Potash: continuing to increase operating productivity
Petroleum & Potash: continuing to increase operating productivity bhpbilliton resourcing the future Production increased by 9% to a record 131 MMboe supported by a 71% increase in Onshore US liquids volumes, although this was offset by lower average realised petroleum prices Significant improvements
Slide 10: Copper: improving cost efficiency mitigates price pressure
Copper: improving cost efficiency mitigates price pressure bhpbilliton resourcing the future Weaker base metal prices, including an 11% decline in the average realised price of copper, significantly affected profitability A 13% reduction in Escondida unit cash costs1 to US$1.06 per pound was achieve
Slide 11: Iron Ore: unit cash costs approaching US$20 per tonne
Iron Ore: unit cash costs approaching US$20 per tonne bhpbilliton resourcing the future WAIO production increased by 15% to a record 124 Mt1 as the ramp-up of Jimblebar continued and we improved the availability, utilisation and rate of our integrated supply chain The average realised price of iron
Slide 12: Coal: systematically reducing our costs
Coal: systematically reducing our costs bhpbilliton resourcing the future Metallurgical coal production increased by 21% to 26 Mt as Queensland Coal and Illawarra Coal both achieved record production Average realised prices declined by approximately 20% for our coal products significantly impacting
Slide 13: Aluminium, Manganese & Nickel: higher prices boosting profitability
Aluminium, Manganese & Nickel: higher prices boosting profitability bhpbilliton resourcing the future Record manganese ore and alumina production was underpinned by strong performances at both Hotazel and the Alumar refinery Higher average realised prices for alumina, aluminium and nickel delivered
Slide 14: Progress against our US$4.0 billion productivity target
We are making great progress against our US$4.0 billion productivity target bhpbilliton resourcing the future Productivity-led volume and cost efficiencies1 (US$ billion) 4.0 3.0 2.0 1.0 0.0 1.0 2.0 3.0+ 4.0+ Volumes Cash costs FY15e FY17 target 1. Represents planned annualised volume and cash cost
Slide 15: Other items affecting profitability
Other items affecting profitability bhpbilliton resourcing the future Other items (US$ million) Underlying EBIT Underlying attributable profit Exceptional items 500 0 (500) (1,000) 325 (361) 174 (290) (290) (809 FX impact on balance sheet monetary items1 Impairments FX impact on net financing costs
Slide 16: Maximising our free cash flow
Maximising our free cash flow by improving productivity and reducing investment bhpbilliton resourcing the future We started preparing for a lower price environment many years ago approaching US$10 billion1 of annualised productivity-led gains capital and exploration expenditure reduced by almost 40
Slide 17: Our balance sheet is strong
Our balance sheet is strong bhpbilliton resourcing the future The Group remains committed to a strong balance sheet and a solid A credit rating – in January 2015, Standard & Poor’s reaffirmed our A+ credit rating Net debt reduced by US$0.8 billion over the period to US$24.9 billion, for a gearing ra
Slide 18: Interim results 2015 financial year - Andrew Mackenzie
Daunia Interim results 2015 financial year Andrew Mackenzie Chief Executive Officer 24 February 2015 bhpbilliton resourcing the future
Slide 19: Emerging economies will drive long-term commodities demand growth
Emerging economies will drive long-term commodities demand growth bhpbilliton resourcing the future Short-term drivers Global growth is expected to increase in CY15 – consumption-led recovery in the US – monetary easing in a number of countries – lower oil prices China’s economy remains healthy, alb
Slide 20: Iron ore: the cost curve will continue to flatten
Iron ore: the cost curve will continue to flatten, leading to more stable pricing bhpbilliton resourcing the future Short-term drivers Iron ore prices are likely to remain subdued over the short to medium term as low-cost supply continues to rise Higher-cost supply, particularly in China, is being c
Slide 21: Coal: a scarcity of high-quality resources supports demand
Coal: a scarcity of high-quality resources supports longer-term demand bhpbilliton resourcing the future Short-term drivers Australian supplier costs have benefited from currency depreciation and lower freight rates Metallurgical coal pricing is expected to remain stable as Australian supply growth
Slide 22: Copper: positive fundamentals despite short-term price weakness
Copper: positive fundamentals despite short-term price weakness bhpbilliton resourcing the future Short-term drivers Prices trended lower as strong supply growth was compounded by concerns over China’s short-term demand Chinese power infrastructure investment and US housing construction will be key
Slide 23: Petroleum: oversupply will clear, requiring higher prices
Petroleum: oversupply will clear, requiring higher prices to meet growing demand bhpbilliton resourcing the future Short-term drivers Crude oil prices declined due to growing US supply, a lower demand outlook and OPEC’s decision to maintain production levels While oversupply is expected to persist t
Slide 24: Unrivalled flexibility to adapt to market volatility
Unrivalled flexibility to adapt to market volatility bhpbilliton resourcing the future Our proven strategy has delivered superior returns throughout the cycle Our capital allocation framework remains unchanged We anticipated changing market conditions and exercised our levers early to maximise free
Slide 25: Continuing strong operational performance
Continuing strong operational performance bhpbilliton resourcing the future Group production1 increased by 9% in H1 FY15 or 12% from the core portfolio – petroleum liquids production increased by 24% to 62 MMboe underpinned by a 71% increase in Onshore US liquids – record Western Australia Iron Ore
Slide 26: We are reducing costs faster than anticipated
We are reducing costs faster than anticipated bhpbilliton resourcing the future We are leading the industry in the pursuit of sustainable productivity gains – unit cost improvements realised at our major basins, ahead of plan We expect to deliver over US$4.0 billion of improvements by the end of FY1
Slide 27: We have substantial investment flexibility
We have substantial investment flexibility bhpbilliton resourcing the future We continue to selectively invest in our high-returning growth options average rate of return1 remains greater than 20% Our level of investment2 is expected to decline to US$12.6 billion in FY15 and to US$10.8 billion in FY
Slide 28: Our progressive base dividend is fundamental
Our progressive base dividend is fundamental bhpbilliton resourcing the future Our strong balance sheet and solid A credit rating are fundamental enablers of our strategy We have increased our interim dividend by 5.1% to 62 US cents per share, for a payout ratio of 62% We remain committed to at leas
Slide 29: Our proposed demerger is progressing to plan
Our proposed demerger is progressing to plan bhpbilliton resourcing the future South32 assets are performing well with record manganese ore and alumina production and strong underlying financial performance It is intended that South32 would – list on the Australian Securities Exchange (ASX) – have a
Slide 30: Our uniquely simple and high-quality portfolio
Our uniquely simple and high-quality portfolio bhpbilliton resourcing the future A simplified portfolio supports our aim to continue to deliver superior returns throughout the cycle With a simpler portfolio, we intend to streamline our organisational design by further simplifying our management stru
Slide 31: Delivering on our commitments
Delivering on our commitments bhpbilliton resourcing the future We continue to realise substantial productivity gains Our plans are flexible and we have reduced investment while preserving long-term value We have increased free cash flow to US$4.1 billion despite weaker prices We have strengthened o
Slide 32: bhpbilliton resourcing the future
bhpbilliton resourcing the future
Slide 33: Appendix
Appendix bhpbilliton resourcing the future
Slide 34: Key net profit sensitivities
Key net profit sensitivities bhpbilliton resourcing the future Approximate impact1 on FY15 net profit after tax of changes of US$ million US$1/t on iron ore price 140 US$1/bbl on oil price2 50 US¢1/lb on copper price 30 US$1/t on metallurgical coal price 30 US¢10/MMbtu on US gas price 25 US¢1/lb on
Slide 35: Signatures
bhpbilliton resourcing the future 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 Billiton Limited and BHP Billiton Plc Date: February 24, 2015 By: