Bhp Group Ltd · ASX:BHP
Bhp — H1 FY21 Earnings Presentation
42 slides from Bhp's earnings presentation, Feb 16, 2021
Slide 1: Results presentation for half year ended 31 December 2020
16 February 2021 For personal use only To: Australian Securities Exchange New York Stock Exchange RESULTS PRESENTATION FOR HALF YEAR ENDED 31 DECEMBER 2020 Attached are the presentation slides for a presentation by the Chief Executive Officer and Chief Financial Officer. A video of this presentation
Slide 2: Financial results Half year ended December 2020
For personal use only Financial results Half year ended 31 December 2020 Spence Growth Option
Slide 3: Disclaimer
Disclaimer For personal use only The information in this presentation is current as at 16 February 2021. It is in summary form and is not necessarily complete. It should be read together with the BHP Results for the half year ended 31 December 2020. Forward-looking statements This presentation conta
Slide 4: Financial results - Mike Henry, CEO
For personal use only Financial results Half year ended 31 December 2020 Mike Henry Chief Executive Officer Western Australia Iron Ore
Slide 5: Consistent approach delivers strong results
Consistent approach delivers strong results Delivering strong safety and operational performance; continuing to grow value as the global economy recovers For personal use only Safer, more reliable with higher margin Strong free cash flow and balance sheet High shareholder returns Strong social value
Slide 6: H1 FY21 operational highlights
H1 FY21 operational highlights Safer and more reliable For personal use only Safety Production Unit costs Zero fatalities Record On track TRIF 16% to 3.5 per million hours worked production at WAIO and concentrator for FY21 guidance1 compared to FY20 throughput at Escondida Reliability Portfolio M
Slide 7: H1 FY21 financial highlights
H1 FY21 financial highlights Higher margin enables higher shareholder returns For personal use only Earnings EBITDA margin Free cash flow US$ 14.7 bn 59% US$ 5.2 bn Underlying EBITDA 21% 3% points 39% Net debt Shareholder returns ROCE US$ 11.8 bn 101 US cps 24% dividend determined, 5% points
Slide 8: H1 FY21 social value highlights
H1 FY21 social value highlights Social value is integrated into all we do For personal use only Operational emissions Inclusion and diversity Social investment Set mid-term 27.4% target US$ 35.4 m female participation across group including continued community support to reduce operational emissions
Slide 9: Financial results - David Lamont, CFO
For personal use only Financial results Half year ended 31 December 2020 David Lamont Chief Financial Officer Nickel West
Slide 10: Financial performance
Financial performance EBITDA margin of 59%, record dividend and strong growth in earnings per share For personal use only Summary income statement Strong earnings delivery H1 FY21 % change (US cents per share) (Index, FY16=100) (US$ billion) 150 200 Underlying EBITDA 14.7 21% Underlying EBITDA mar
Slide 11: Segment performance
Segment performance Full year unit cost guidance remains unchanged For personal use only Iron Ore4 Copper Metallurgical Coal Petroleum EBITDA: US$10.2 bn US$3.7 bn US$0.1 bn US$0.8 bn EBITDA margin: 73% 60% 3% 49% WAIO Escondida Queensland Coal Petroleum (US$/t) (US$/lb) (US$/t) (US$/boe) Unit cost
Slide 12: Consistent cash generation and returns
Consistent cash generation and returns Strong underlying operations deliver consistent cash flow and dividends For personal use only Net operating cash flow Free cash flow and dividends (US$ billion) (Index, FY10=100) (US$ billion) (% of FCF after dividends to NCIs) 30 200 30 120 95% 200 25 25 100 8
Slide 13: Capital allocation
Capital allocation Disciplined adherence to our Capital Allocation Framework For personal use only H1 FY21 Operating Capital productivity productivity Net operating cash flow US$9.4 bn Maintenance capital US$1.1 bn Strong balance sheet Minimum 50% payout ratio dividend US$1.9 bn Excess cash US$5.4
Slide 14: Return on Capital Employed
Return on Capital Employed H1 FY21 of ROCE 24% For personal use only ROCE ROCE by asset H1 FY21 (%, excluding Onshore US) (%) 25 70 Excludes investment in major projects in execution 40 Antamina8,9 20 30 15 WAIO8 20 Escondida 10 Pampa 10 Norte Potash10 Exploration8 Petroleum ex-Exploration Olympic N
Slide 15: Financial results - Mike Henry, CEO
For personal use only Financial results Half year ended 31 December 2020 Mike Henry Chief Executive Officer Pyrenees
Slide 16: A constructive outlook
A constructive outlook Recovery from COVID-19 dominates the near term; major inflection points beckon beyond that For personal use only Policy makers Fears of Growth & inflation Synchronised Macro environment remain austerity & expectations upswing growth focused deflation recede increase Demand Dis
Slide 17: Longer term drivers for resources
Longer term drivers for resources Population growth, decarbonisation and rising living standards will drive demand for energy, metals and fertilisers for decades For personal use only Population growth… …of which urban… …creates new demand… …including for capex (world GDP nominal US$) (world capex n
Slide 18: Delivering on our agenda
Delivering on our agenda We continue to execute levers to deliver leading financial returns and social value For personal use only Safe High performing Lean Future fit • Relentless focus on • High level of operational • Sector leading low-cost, • Portfolio benefits in eliminating fatalities; two rel
Slide 19: Growth options to capitalise on market opportunities
Growth options to capitalise on market opportunities Assessing options with exposure to strategic themes, while adding more options in future facing commodities For personal use only Iron ore Metallurgical Coal Petroleum Copper Nickel Potash Large resource base gives us optionality Latent capacity N
Slide 20: Social value is core to everything we do
Social value is core to everything we do The world will not decarbonise without more mined resources, produced sustainably For personal use only A history of action Committed to leadership • Operational emissions: Setting public GHG emissions • Operational emissions: 30% reduction by 2030; net zero
Slide 21: Investment proposition
Investment proposition We grow long-term shareholder value through reliable operations, optimal allocation of capital and creating social value For personal use only Maximise cashflow Capital discipline Value and returns Net debt Low-cost producer targeting lower end 24% ROCE disciplined focus on co
Slide 22: For personal use only
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Slide 23: Appendix
For personal use only Appendix
Slide 24: Social value scorecard
Social value scorecard We are making good progress on our social value commitments For personal use only Category Key indicators H1 FY21 H2 FY20 H1 FY20 FY20 Target Fatalities 0 0 0 0 Zero work-related fatalities High Potential Injury (HPI) frequency Safety and 0.20 0.14 0.32 0.24 Year-on-year impro
Slide 25: HY21 social value highlights
HY21 social value highlights Our purpose is to bring people and resources together to build a better world For personal use only People, Culture Community Climate Change Environment and Capability and Society Diversity Principles around Aboriginal Portfolio review Fresh water withdrawals Female part
Slide 26: Our approach to Heritage
Our approach to Heritage Developing mutually beneficial long-term relationships founded on respect and understanding For personal use only BHP Indigenous Peoples Policy Statement We aim to be a partner of choice for Indigenous Peoples through which our relationships contribute to their economic empo
Slide 27: Determined to contribute to a sustainable future
Determined to contribute to a sustainable future For personal use only • A charitable organisation solely funded by BHP but operates independently. Focus Areas: OVERVIEW • Contributes to the achievement of many of the UN SDGs, addressing global sustainable development challenges. Natural Natural Res
Slide 28: Asset performance and plans: Petroleum
Asset performance and plans Resilient core asset with quality growth options For personal use only Petroleum delivering low cost barrels today… …while replenishing the portfolio for tomorrow Progressing our sanctioned projects and pipeline of near-term opportunities Translating Exploration and Appra
Slide 29: Escondida sets new record; Spence Growth Option first copper
Asset performance and plans Escondida sets new record; Spence Growth Option delivers first copper For personal use only Escondida Pampa Norte • Strong operational performance lowers costs • Spence Growth Option (SGO) delivers first copper • New concentrator throughput record of 386 ktpd • SGO produc
Slide 30: Olympic Dam and Nickel West
Asset performance and plans Olympic Dam and Nickel West sustainably increasing production and returns For personal use only Olympic Dam Nickel West Focused on operational stability Building strong, stable foundations • Highest production for a half in five years through improved smelter performance
Slide 31: WAIO and Queensland Coal
Asset performance and plans Value growth through continuous improvement; South Flank on track for first production in mid-CY21 For personal use only WAIO Queensland Coal Supply chain reliability underpins record production Solid operating and cost performance in a challenging environment • Achieved
Slide 32: Samarco and Renova Foundation
Samarco and Renova Foundation Renova has spent R11.3 billion on remediation and compensation programs; New, court-sanctioned payment system in place For personal use only Compensation Resettlement Samarco • ~R3.1 billion indemnification and financial aid paid • Resettlement progress continues despit
Slide 33: Exceptional items
Exceptional items Attributable profit of US$3.9 billion includes an exceptional loss of US$2.2 billion For personal use only Gross Tax Net Half year ended 31 December 2020 US$M US$M US$M Half year ended 31 December 2020 US$M Other income − Exceptional items by category Expenses excluding net finance
Slide 34: Working capital and balance sheet
Working capital and balance sheet Net debt of US$11.8 billion and gearing of 18.1% For personal use only Movements in working capital (expected to unwind in H2 FY2021) Debt maturity profile3 (US$ billion) (US$ billion) 0.0 8 Inventory build up due to strong operational throughput (1.0) (0.8) 6 (0.4)
Slide 35: Projects in feasibility
Projects in feasibility For personal use only Jansen Stage 1 Scarborough Saskatchewan, Canada Australia 13 subsea wells tied back to a semisubmersible FPU2; dry gas Shaft equipping, mine development, processing facility, site pipeline ~435 km in length transports dry gas from the FPU to infrastructu
Slide 36: Technology
Technology Technology is a key lever for BHP to improve front-line safety, increase production, reduce costs and create value at velocity For personal use only Effectiveness Predictability Decision Automation Optimised PASPO 5 Digital Centres Reduction of >50% in technology applies machine learning
Slide 37: BHP guidance
BHP guidance Group FY21e FY22e For personal use only Capital and exploration expenditure (US$bn) 7.3 ~8.5 Cash basis. Guidance for FY21 has increased by US$0.3 billion to US$7.3 billion due to a stronger Australian dollar. Guidance for FY22 remains unchanged at approximately US$8.5 billion (at guida
Slide 38: BHP guidance (continued)
BHP guidance (continued) Copper FY21e Medium term For personal use only Copper production (kt) 1,510 – 1,645 Escondida: 970 – 1,030 kt; Pampa Norte 240 – 270 kt; Olympic Dam: 180 – 205 kt; Antamina: 120 – 140 kt (zinc 140 – 160 kt). Capital and exploration expenditure (US$bn) 2.5 Includes ~US$52 mil
Slide 39: BHP guidance (continued)
BHP guidance (continued) Coal FY21e Medium term For personal use only Metallurgical coal production (Mt) 40 – 44 46 – 52 Expected to be at the lower half of the guidance range. Energy coal production (Mt) 21 – 23 NSWEC: 15 – 17 Mt, expected to be at the lower half of the guidance range; Cerrejón: ~6
Slide 40: Key Underlying EBITDA sensitivities
Key Underlying EBITDA sensitivities For personal use only Approximate impact1 on FY21 Underlying EBITDA of changes of: US$ million US$1/t on iron ore price2 236 US$1/bbl on oil price3 37 US$1/t on metallurgical coal price 37 US¢1/lb on copper price2 33 US$1/t on energy coal price2 15 US¢1/lb on nick
Slide 41: Footnotes
Footnotes 1. Slide 5: Unit cost guidance for the 2021 financial year remains on track, subject to any potential impacts on volumes from restrictions on coal imports into China and further significant wet weather during the remainder of the 2021 financial year. 2. Slide 7: Scope 3 goals to contribute
Slide 42: For personal use only
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