Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — JP Morgan CEO Conference 2002
37 slides from Bhp's conference presentation, April 2002
Slide 1: BHP Billiton “Fairy Tales for Investors”
BHP Billiton “Fairy Tales for Investors” Brian Gilbertson: CEO - elect JP Morgan CEO Conference 2002 Lake Como, Italy April 2002
Slide 2: Enter the knight in shining armour…
Enter the knight in shining armour… Page 2
Slide 3: 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 2001 March April 2002 Page 3
Slide 4: Industry Consolidation
Industry Consolidation Gold Fields-Driefontein MINERALS M&A Barrick-Homestake merger * Combined Mk Billiton IPO restructure Placer Dome - Cap. of BHPB Newmont acquires Getchell (Deals above US$1B) Billiton increases stake Anglo acquires Shell Rio acquires North Ltd. Santa Fe in Worsley 86% coal asse
Slide 5: 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 6: 2002 – Industry Structure
Page 6 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 7: 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 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: BHP Billiton has delivered superior shareholder returns
BHP Billiton has delivered superior shareholder returns (from a Billiton perspective) since listing in London Total Shareholder Returns – 1997-2002 200 180 160 140 120 BHP Billiton Rio Tinto 100 Anglo 80 FTSE100 S&P Industrials 60 Dow Jones Industrials 40 Source: Datastream 20 0 01/08/1997 01/11/199
Slide 10: BHP Billiton’s historical PE multiples are behind major industrials
BHP Billiton’s historical market (PE) multiples are behind those of the major industrials Price-Earnings Ratios – 1997-2002 60 50 40 BHP Billiton Rio Tinto 30 Anglo FTSE100 20 S&P Industrials Dow Jones Industrials 10 Source: Datastream 0 01/08/1997 01/11/1997 01/02/1998 01/05/1998 01/08/1998 01/11/1
Slide 11: Value Drivers - What distinguishes us from the rest
Value Drivers - What distinguishes us from the rest I. Stability From Outstanding Assets II. Stability From The Portfolio Effect III. Stability & Growth From Customer-Centric Marketing IV. Growth From Deep Inventory of Projects V. Growth From Petroleum VI. Growth Through Innovation Page 11
Slide 12: Value Driver I: Stability From Outstanding Assets
Value Driver - I I. Stability From Outstanding Assets Page 12
Slide 13: Escondida Copper Mine - Chile
Escondida Copper Mine - Chile Page 13
Slide 14: Worsley Alumina Refinery - Australia
Worsley Alumina Refinery - Australia Page 14
Slide 15: Mozal Aluminium Smelter - Mozambique
Mozal Aluminium Smelter - Mozambique Page 15
Slide 16: BHP Billiton Mitsubishi Alliance (BMA) - Australia
BHP Billiton Mitsubishi Alliance (BMA) - Australia Page 16
Slide 17: Ingwe Coal – South Africa
Ingwe Coal – South Africa Page 17
Slide 18: Ekati Diamond Mine - Canada
EkatiTM Diamond Mine - Canada Page 18
Slide 19: Bass Strait – Australia
Bass Strait – Australia Page 19
Slide 20: North West Shelf Project - Australia
North West Shelf Project - Australia Page 20
Slide 21: Value Driver I: Stability From Outstanding Assets
Value Driver - I I. Stability From Outstanding Assets Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) • Operating excellence • Cut operating costs by 2% p.a. on BHP Billiton Way average for 3 years. (US$500M FY03-05) Improved EBIT and FCF. EBIT
Slide 22: 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 23: Value Driver II: Stability from the Portfolio Effect
Value Driver - II II. Stability from the Portfolio Effect Page 23
Slide 24: 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 25: 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 25
Slide 26: Value Driver II: Stability from the Portfolio Effect
Value Driver - II II. Stability from the Portfolio Effect Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) • Portfolio management • Credit rating of ‘A’ or better. • Funding and capital Positive Cash Flow each year. management EBITDA/Interest co
Slide 27: Value Driver III: Stability & Growth From Customer-Centric Marketing
Value Driver -III III. Stability & Growth From Customer-Centric Marketing Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) • Serving customers best • Preferred supplier status. Global marketing and trading. Page 27
Slide 28: 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 29: Value Driver IV: Growth From Deep Inventory of Projects
Value Driver - IV IV. Growth From Deep Inventory of Projects Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) • Investment judgement. • Decide/implement projects (potential US$10B by FY2006) Project management skills. Page 29
Slide 30: Sample of new look
Sample of new look BROWNFIELD Mozal 2 Bream Gas Yabulu Mount R’thorpe Pipeline Intercor Arthur North Esc’da Zamzama FFD CdC Norte Escondida Exp’n Dendrobium Phase IV Hillside 3 Mining GoM Tintaya San Juan Area C Infrastr. Sth BW Oxide NWS 4th Train CY 2002 2003 2004 2005 Mad ROD Dog Spence Minerva O
Slide 31: Pursuit of high value growth
Pursuit of high value growth …US$10 billion in growth projects 40 Investment by Business (% of group total in 2002-06) 30 20 35-40 10 15-20 15 10 10 10 0 Petroleum Base Metals Aluminium Energy Coal Carbon Stainless Steel Steel & Materials Other * Indicative data only Page 31
Slide 32: Value Driver V: Growth From Petroleum
Value Driver - V V. Growth From Petroleum Strategic Imperatives Performance Measures (What we have to get right) (How the market should judge us) • Value adding growth • Low discovery costs. Growing reserves and production. Page 32
Slide 33: Petroleum’s Industry Ranking
Petroleum’s Industry Ranking Production (Mmboe) Oil & Gas and Energy - Market Value (US$M) ExxonMobil ExxonMobil Shell BP Shell Chevron Texaco TotalFina Elf BP Repsol-Ypf TotalFinaElf Phillips Conoco ChevronTexaco Unocal Occidental ENI Talisman Energy E.ON 9th in terms of Marathon 15th in terms of m
Slide 34: Value Driver VI: Growth Through Innovation
Value Driver - VI VI. Growth Through Innovation Page 34
Slide 35: We aspire to be one of the world’s premier companies
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 We aspire to be one of the world’s premier companies Page 35
Slide 36: Ohpoilliton
égl Ohpoilliton
Slide 37: 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 Stability From • Operating excellence. • Cut operating costs by 2% p.a. on average for 3 yrs. Outstanding Assets (US$500M FY03-05) Improved EBI