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BHP’s year end results

(Posted on 28/08/18)

BHP has released its full year results and Andrew Mackenzie, Chief Executive Officer and Peter Beaven, Chief Financial Officer reviewed the Company’s operating and financial performance:

Following BHP’s sale of the Onshore US assets, as announced on 27 July 2018, the contribution of these assets has been presented in this report as discontinued operations and related assets and liabilities reclassified as held for sale.
– Tragically, we had two fatalities during the year, one at our Permian operations and one at Goonyella Riverside.
– Samarco Governance Agreement settles the BRL20 billion Civil Claim, enhances community participation in Renova Foundation programs and establishes a process to progress settlement of the BRL155 billion Civil Claim.
– Attributable profit of US$3.7 billion, Underlying attributable profit of US$8.9 billion up 33%, supported by 8% Group copper equivalent volume growth.
– Underlying EBITDA(ii) of US$23.2 billion at a margin(iii) of 55% for continuing operations.
– Net operating cash flow of US$18.5 billion and free cash flow(i) of US$12.5 billion reflect higher prices and volumes, with annual production records at nine operations across iron ore, coal, copper and petroleum.
– Productivity up US$374 million in the second half to negative US$96 million from continuing operations for the full year.
– Productivity gains of ~US$1 billion now expected for the 2019 financial year, with strong momentum to be carried into the 2020 financial year.
– Net debt(i) of US$10.9 billion, down US$15 billion in two years, reflects capital discipline and strong free cash flow.
– Capital and exploration expenditure(v) within guidance at US$6.8 billion. Future guidance unchanged at below US$8 billion per annum for the 2019 and 2020 financial years.
– The Board has determined to pay a record final dividend of 63.0 US cents per share which includes an additional amount of 17 US cents per share above the 50% minimum payout policy (equivalent to US$0.9 billion).
– Underlying return on capital employed(iii) of 14.4% (after tax) with further improvement expected.
– Onshore US sale announced for US$10.8 billion and we expect to return the net proceeds to shareholders.

BHP Chief Executive Officer, Andrew Mackenzie:
“We have announced a record final dividend for shareholders which reflects strong operating performance, solid prices and capital discipline. Our relentless focus on safety and productivity has released additional volumes across our supply chain, with eight per cent volume growth for the year. Our balance sheet is strong, with net debt now at the lower end of our target range, and our investment plans on track across iron ore, copper, coal and petroleum. We have started the new year with the sale of our Onshore US business for US$10.8 billion, and once completed we expect to return the net proceeds to shareholders. Across our dramatically simplified portfolio of tier one assets, we see this year’s strong momentum carried into the medium term as our leadership, technology and culture drive further increases in productivity, value and returns. Our rich suite of options coupled with our rigorous Capital Allocation Framework will make sure we get the most out of every dollar we invest.”
The health and safety of our employees and contractors, and that of the broader communities in which we operate, are central to the success of our organisation. Tragically, two of our colleagues died during the period, one at our Permian Basin operations in November 2017 and one at Goonyella Riverside in August 2017. Our Total Recordable Injury Frequency (TRIF) was 4.4 per million hours worked in the 2018 financial year, a five per cent increase from the prior year. The number of high potential injuries, which are injury events where there was the potential for a fatality, declined by eight per cent in the year.

We are committed to becoming safer through how we engage with our teams on risk and controls, how we design our facilities and how we plan and execute our work. We are focused on leading indicators to improve safety performance, with a significant increase in proactive hazard reporting from the workforce and in-field safety leadership engagements throughout the 2018 financial year. We are improving the integrity of our facilities and equipment, and are increasing the application of technology to help make our work places safer.

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