Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — FY2002 Earnings Presentation
41 slides from Bhp's earnings presentation, Aug 7, 2002
Slide 1: Preliminary Results
PRELIMINARY RESULTS 7 August 2002
Slide 2: Preliminary Results – Brian Gilbertson, CEO & Managing Director
PRELIMINARY RESULTS Brian Gilbertson CEO & Managing Director
Slide 3: Preliminary results highlights
Preliminary results highlights (US$M) 2002 2001 % Change Turnover(1) 17,778 19,079 -6.8 EBITDA(1)(2) 4,915 5,299 -7.2 EBIT(1)(2) 3,188 3,627 -12.1 Attrib profit (excl exceptionals) 1,934 2,189 -11.6 Exceptional items (244) (660) Attrib profit (incl exceptionals) 1,690 1,529 10.5 Operating cash flow(
Slide 4: The first months – progress and achievements
The first 12 months – progress and achievements • Merger integration successfully completed • Business model developed and CSG organisation in place • Marketing hubs operational • US$2.9 billion of new projects sanctioned • Portfolio management – Arutmin, Columbus, Ekati • Strategic framework launch
Slide 5: BHP Steel de-merger complete
BHP Steel de-merger complete • Strong demand for BHP Steel shares • Final pricing for offer A$2.80 • Strong interest following initial listing • Debt repayment of US$320 million to BHP Billiton • Raised US$75 million from 6% sale • Bonus issue of approximately 149 million new Plc shares Preliminary
Slide 6: Preliminary Results – Chris Lynch, Chief Financial Officer
PRELIMINARY RESULTS Chris Lynch Chief Financial Officer
Slide 7: Preliminary results highlights
Preliminary results highlights (US$M) 2002 2001 % Change Turnover(1) 17,778 19,079 -6.8 EBIT(1)(2) 3,188 3,627 -12.1 Attrib profit (excl exceptionals) 1,934 2,189 -11.6 Attrib profit (incl exceptionals) 1,690 1,529 10.5 Operating cash flow(3) 3,918 3,837 2.1 (1) Including share of joint ventures and
Slide 8: Turnover by CSG – year ended June
Turnover by CSG – year ended 30 June (US$M) 2002 2001 % Change Aluminium 2,857 2,971 -4 Base Metals 1,821 1,719 6 Carbon Steel Materials 3,306 3,349 -1 Stainless Steel Materials 868 994 -13 Energy Coal 1,919 1,982 -3 Diamonds & Spec Products 1,469 1,308 12 Petroleum 2,815 3,361 -16 Steel 2,785 3,760
Slide 9: EBIT by Customer Sector Group – year ended June
EBIT by Customer Sector Group – year ended 30 June Excluding exceptional items (US$M) 2002 2001 % Change Aluminium 492 523 -6 Base Metals 200 462 -57 Carbon Steel Materials 1,084 918 18 Stainless Steel Materials 3 72 -96 Energy Coal 536 382 40 Diamonds & Spec Products 348 310 12 Petroleum 1,073 1,40
Slide 10: EBIT analysis – excluding exceptional items
EBIT analysis – excluding exceptional items Year ended June 2002 v year ended June 2001 US$M 4,000 3,627 3,500 3,188 3,000 2,500 (665) 2,000 1,500 1,000 500 0 Year Prices Inflation Price Exch Costs Merger Net Other Expln Sold Year ended impact linked rates one-off volumes ops ended June on costs cos
Slide 11: Impact of commodity price changes on EBIT
Impact of commodity price changes on EBIT US$M Met Energy Coal Coal 200 168 147 100 0 Other Silver -100 (11) Zinc Chrome Nickel (13) Copper -200 (85) (95) (102) Aluminium -300 (186) -400 -500 Petroleum (488) Excludes impact of price linked costs, which had a favourable impact of US$270M Preliminary
Slide 12: EBIT analysis – excluding exceptional items
EBIT analysis – excluding exceptional items Year ended June 2002 v year ended June 2001 US$M 4,000 3,627 115 375 3,500 3,188 270 (35) 3,000 2,500 (665) (210) 2,000 1,500 1,000 500 0 Year Prices Inflation Price Exch Costs Merger Net Other Expln Sold Year ended impact linked rates one-off volumes ops
Slide 13: EBIT analysis – excluding exceptional items
EBIT analysis – excluding exceptional items Year ended June 2002 v year ended June 2001 US$M 4,000 3,627 115 375 20 3,500 3,188 270 (35) (9) (45) 3,000 (255) 2,500 (665) (210) 2,000 1,500 1,000 500 0 Year Prices Inflation Price Exch Costs Merger Net Other Expln Sold Year ended impact linked rates on
Slide 14: Exceptional items
Exceptional items (US$M) After tax South West Copper (101) Tintaya (22) Change in UK tax rate on petroleum operations (56) Merger restructuring costs & provisions (65) Total (244) Preliminary Results Slide 14 7 August 2002
Slide 15: Net interest
Net interest Year ended 30 June (US$M) 2002 2001 Net interest expense before FX impact (429) (625) Exchange impact on debt 180 149 Net interest expense (249) (476) Net debt 6,822 7,321 Credit ratings: S&P ‘A’ (positive); Moody’s ‘A3’ (positive) Preliminary Results Slide 15 7 August 2002
Slide 16: Taxation
Taxation Year ended 30 June (US$M) 2002 2001 Tax expense before exceptionals & FX 960 1,056 Tax expense/(benefit) on FX adjustments (2) (113) Tax expense before exceptionals 958 943 Tax expense/(benefit) on exceptionals 32 (132) Total tax expense 990 811 • Effective tax rate 32.6% excluding exceptio
Slide 17: USD functional currency policy
USD functional currency policy • Merged group confirmed USD functional currency • Predominant currency of global business – Revenue – Some costs – Most debt • Non monetary items held at fixed historical exchange rates • Monetary items marked to market – to P&L • Non cash • Site restoration and rehab
Slide 18: USD functional currency policy - general level of exposure
USD functional currency policy - general level of exposure (US$M) AUD Rand Impact Net payables, receivables & (400) (100) P&L employee provisions Tax provisions (600) (400) P&L Debt - (300) P&L Total (1,000) (800) P&L Restoration & Rehab (500) (100) Bal sheet Preliminary Results Slide 18 7 August 20
Slide 19: Impact on FY02 results of restatements of net monetary liabilities
Impact on FY02 results of restatements of net monetary liabilities Impact in Impact in full (US$M) 2002 June qtr year EBIT 3,188 (45) (15) Net interest (249) (40) 180 Taxation expense (958) (100) 15 Attributable profit 1,934 (185) 180 Exchange rates As at As at As at Versus US dollar 30 June 2002 31
Slide 20: Financial ratios
Financial ratios Year ended 30 June 2002 2001 Net debt/(net debt + equity)(%) 35.0 38.4 EBITDA interest cover (times) 11.0 8.5 Return on capital (%) 11.0 13.7 Preliminary Results Slide 20 7 August 2002
Slide 21: Capital expenditure
Capital expenditure 2002 2003 (US$M) Actual Forecast Project expenditure 1,620 2,380 Sustaining capital 860 840 Exploration expenditure 390 310 Investment expenditure 340 Total 3,210 3,530 Capital expenditure excluding disposals Preliminary Results Slide 21 7 August 2002
Slide 22: Preliminary Results – Brian Gilbertson, CEO & Managing Director
PRELIMINARY RESULTS Brian Gilbertson CEO & Managing Director
Slide 23: CSG operating review – Aluminium, Base Metals
CSG operating review ALUMINIUM • 12% (US$180/tonne) decrease in average LME aluminium price • Aluminium production flat. Higher production from full commissioning at Mozal offset by lower volumes in Brazil • Alumina production up 34% due to increased interest in Worsley BASE METALS • 12% (US$0.09/lb
Slide 24: CSG operating review – Carbon Steel, Stainless Steel Materials
CSG operating review CARBON STEEL MATERIALS • Iron ore production of 67.9 million tonnes, up 3% • Met coal production of 35.5 million tonnes, down 4% • Satisfactory iron ore price settlement achieved in May • Hard coking coal prices increased to a range of $48/t to $50/t STAINLESS STEEL MATERIALS •
Slide 25: CSG operating review – Energy Coal, Petroleum
CSG operating review ENERGY COAL • Higher export prices in first half benefited annual average prices • Low spot prices in second half due to warm European winter • Lower production in South Africa, US and Indonesia • Full year contribution from CdC and CZN (Colombia) PETROLEUM • 19% (US$5.46/bbl) d
Slide 26: CSG operating review – Steel, Diamonds
CSG operating review STEEL • Lower international prices for steel products • Higher per unit costs • Stronger Australian domestic demand for value added products DIAMONDS • Increased production due to increased ownership in Ekati and higher recoveries of lower quality diamonds • Higher carat grade o
Slide 27: Growth From Deep Inventory of Projects
Growth From Deep Inventory of Projects BROWNFIELD Mozal Mozal22 Yabulu Yabulu R’thorpe R’thorpe Bream Gas Pipeline Mount Mount Hillside Hillside 33 Esc’da Esc’da Escondida Escondida Arthur Arthur North North Norte Norte Phase Phase IV IV GoM Zamzama NWS NWS Infrastr. Dendrobium San San Mining Mining
Slide 28: Growth – New projects committed in FY02
Growth – New projects committed in FY02 Mining Mining Area Area CC Port Port && Mad Zamzama Zamzama Capacity Capacity Expansion Expansion Mad Dog Dog Gas Oil Oil && Gas Gas Mozal Mozal 22 Expansion Expansion Gas Iron Iron Ore Ore Aluminium Aluminium Dendrobium Dendrobium Gulf Gulf of of Mexico Mexic
Slide 29: Growth pipeline – update on sanctioned projects: Minerals
Growth pipeline – update on sanctioned projects Minerals Project Commodity Share of Capex Target Progress US$M completion date Mozal 2 (Mozambique) – 47.1% Aluminium 405 Q4 2003 On time Hillside 3 (South Africa) – 100% Aluminium 449 Q2 2004 On time Escondida Phase IV (Chile) – 57.5% Copper 600 Q3 20
Slide 30: Growth pipeline – update on sanctioned projects: Petroleum
Growth pipeline – update on sanctioned projects Petroleum Project Commodity Share of Capex Target Progress US$M completion date Ohanet (Algeria) – 45% Gas 464 Q3 2003 On time On revised ROD (Algeria) – 45% Oil/gas 179 Q2 2004 schedule Mad Dog (US) – 23.9% Oil/gas 335 Q4 2004 On time Atlantis (US) –
Slide 31: Strategic Framework scorecard
Strategic Framework scorecard FY02 Value Driver Strategic imperatives Performance performance measures I. Outstanding assets Zero harm Improve HSEC Fatalities - 13 statistics LTIFR - 2.24 Community – 1% 1.47% of pre-tax profits Cut operating Operating excellence costs by 2%pa Initiatives underway Re
Slide 32: Strategic Framework scorecard
Strategic Framework scorecard Value Driver Strategic imperatives Performance FY02 performance measures IV. The portfolio effect Portfolio management Credit rating of S&P: A (positive) ‘A’ or better Moodys: A3 (positive) Funding and capital Positive cash $1.3bn management flow before dividends & fund
Slide 33: Merger benefits – US$270M by end FY03
Merger benefits – US$270M by end FY03 • Cost savings and efficiency gains occuring as a result of the merger of BHP and Billiton US$M Revenue enhancement Marketing operations 25 EBIT synergies Operational ongoing 92 Operating Excellence 50 Strategic Sourcing 18 Total EBIT synergies 185 Financing syn
Slide 34: Strategic framework US$500M cost reduction target
Strategic framework US$500M cost reduction target • Cost savings and efficiency gains resulting from corporate excellence and a focus on our core business – Operating excellence – Simplified corporate structure and processes – Marketing organisation – increased volumes and market share – Productivit
Slide 35: Total shareholder return performance July 2001 to June 2002
Total shareholder return performance 1 July 2001 to 30 June 2002 % 5 0 -5 -10 -15 -20 BHPB Ltd BHPB Plc FTSE 100 S&P 500 ASX 200 Source: Bloomberg Preliminary Results Slide 35 7 August 2002
Slide 36: Summary and outlook
Summary and outlook • Solid first year results • Delivering against Strategic Framework • Marketing and supply side discipline • FY03 focus on costs and growth projects • Expect further successes in Petroleum and Marketing • Well positioned for recovery but outlook remains uncertain Preliminary Resu
Slide 37: Preliminary Results Slide 37 7 August 2002
Preliminary Results Slide 37 7 August 2002
Slide 38: Backup slides
PRELIMINARY RESULTS BACKUP SLIDES
Slide 39: Key net profit sensitivities
Key net profit sensitivities Approximate impact on forecast FY03 net profit after tax of changes of: (US$M) US$1/bbl on oil price 45 US$50/t on aluminium price 35 USc1/lb on copper price 15 USc10/lb on nickel price 10 US$1/t on energy coal price 25 US$1/t on metallurgical coal price 20 US$1/t on iro
Slide 40: Key net profit sensitivities
Key net profit sensitivities Approximate impact on forecast FY03 net profit after tax of changes of: (US$M) Australian dollar (USc1/A$) Operations (net of hedging)(1) 20 Net monetary liabilities(2) 20 South African Rand (0.2 Rand/US$) Operations(1) 10 Net monetary liabilities(2) 10 Rand debt(2) 5 (1
Slide 41: Exchange rates
Exchange rates The following exchange rates have been used in these results Average As at As at Year ended Versus US dollar 30 June 2002 30 June 2001 30 June 2002 South African rand 10.25 8.08 10.03 Australian dollar 1.77 1.98 1.91 Brazilian real 2.82 2.30 2.50 Chilean peso 697.6 631.8 672.1 Colombi