20 August 2001
The BHP Billiton Group (BHP Billiton) has announced a record combined attributable profit of US$2,189 million, excluding exceptional items, for the 12 months to 30 June 2001. Earnings per share, excluding exceptional items, for the year was US$0.37, compared with US$0.30 for the previous year.
The result represents the combined attributable profit of BHP Billiton Limited and BHP Billiton Plc and is an increase of US$446 million, or 26 per cent, compared with the 2000 financial year combined results.
BHP Billiton CEO and Managing Director Paul Anderson said: "This is an outstanding result that demonstrates BHP Billiton's financial strength, earnings capability across a wide range of world-class businesses and underlying balance sheet strength."
Including exceptional items, the result for the 12 months ended 30 June 2001 was US$1,529 million, an improvement of US$23 million compared with the 2000 financial year. The result includes transaction costs associated with the merger of US$92 million, a US$410 million charge to profit related to HBI Venezuela and a US$148 million charge to profit for the write-off of BHP Billiton's share of the net assets in the Ok Tedi copper project (Papua New Guinea).
Mr Anderson said both sides of the BHP Billiton Group had delivered record financial results (on a pre-merger basis) and made significant progress in delivering value-adding growth.
BHP Billiton Limited
"BHP Billiton Limited's record result of A$2 billion was achieved despite charges to profit associated with our decision to cease further investment in HBI Venezuela and the write-down at Ok Tedi. Attributable net profit was up 27 per cent on last year, which was also a record result."
"We also improved the fundamental financial performance of the Company and excellent progress was made in reinvigorating the quality of the portfolio. The fix-up, clean-up stage was all but complete last year and we made a number of hard portfolio decisions."
"In addition, we successfully completed two other major transactions; the spin-out of OneSteel and the joint acquisition of QCT Resources with Mitsubishi - and subsequent equalisation of ownership interests in the metallurgical coal business."
"Quite apart from the merger with Billiton, we committed to a number of important new growth projects including:
- Escondida Phase IV (Copper, Chile).
- North West Shelf Train 4 (LNG, Australia).
- The Ohanet (Gas/Liquids) development in Algeria.
- San Juan underground (Coal, United States).
- Tintaya Oxide (Copper, Peru).
- The Blackwater mine integration (Coal, Australia).
- Laminaria Phase II (Oil, Australia).
Total commitment for these projects was about A$3 billion (US$1.5 billion). Over two thirds of the funds committed were to extensions of existing projects, thereby providing low-risk, higher value incremental growth."
"Operationally, we achieved a number of important milestones during the year. Production and shipment records were set in our iron ore business, metallurgical coal production was significantly higher during the period, we commenced contractual gas sales from the Extended Well Test on the Zamzama gas field (Pakistan), and the Typhoon oil field development in the deepwater Gulf of Mexico was brought into production less than 18 months from project sanctioning and under budget."
BHP Billiton Plc
Mr Anderson said BHP Billiton Plc also had an outstanding year in financial, operational and growth terms. Excluding exceptional items, operating profit increased 33 per cent to a record US$1.12 billion and attributable profit increased 22 per cent to a record US$693 million.
"BHP Billiton Plc continued its strategy of aggressive growth during the year, with the US$1.2 billion acquisition of Rio Algom and a 56 per cent increase in its ownership of Worsley Alumina (Western Australia), consolidating BHP Billiton Plc's global position at the bottom of the alumina cost curve, while securing feedstock for the Mozal (Aluminium, Mozambique) and Hillside (Aluminium, South Africa) operations."
"During the year BHP Billiton Plc also successfully completed construction and commissioning at the Mozal aluminium smelter, the Cerro Matoso (Colombia) nickel expansion, and achieved mechanical completion at the Antamina copper project (Peru) and the Worsley refinery expansion. All were completed ahead of schedule and under budget, with the production and revenue stream now flowing through to BHP Billiton shareholders."
"In addition, BHP Billiton Plc established a substantial production base in energy coal though the acquisition of equity positions in Carbones del Cerrejon and Cerrejon Zona Norte (Colombia), providing the Group with access to energy coal resources on three continents; Australia, South America and South Africa."
"BHP Billiton Plc continued to improve its operational efficiency during the year. Excluding the beneficial impact of exchange rates and commodity price-linked cost movements, unit operating costs were reduced by two per cent in real terms," Mr Anderson said.
"Individually both companies have a great story - put them together and it's even better. We set out to create an industry leader. A new Group that would have the strength of a diversified portfolio of outstanding assets, tremendous financial flexibility and enhanced opportunities for growth, through a powerful inventory of projects."
"That was the vision. This vision is given real substance in the inaugural result."
"On a pre-exceptionals basis, the BHP Billiton Group generated EBITDA of US$5.3 billion. In balance sheet terms, gearing was 38 per cent the and pre-exceptional EBITDA interest cover ratio was 11.1 times. Even with over US$1 billion in exceptional items, the EBITDA interest cover ratio was 8.8 times."
"The Group spent US$6 billion on acquisitions and new project developments during the last financial year. The full financial benefits of this investment will be realised by shareholders over the coming years."
"The BHP Billiton Group has an impressive base of cash generating assets; with a long pipeline of growth projects and a sufficiently flexible and strong balance sheet to fund both internally generated and other identified opportunities."
Commenting on the integration, Mr Anderson said progress had exceeded expectations.
"The planning and execution of the integration has been thoroughly planned and executed in a professional way. Our new management teams and structure have been in place since day one of the merger completion, enabling us to maintain the momentum that has been such a key driver of the performance over the past year."
"Since the merger was announced, we have committed to the Mozal 2 expansion and to the development of the Mount Arthur North energy coal mine (Australia). We have also completed the acquisition of Dia Met (Diamonds, Canada), finalised the Queensland metallurgical coal equalisation and announced the sell-down of our interest in the Columbus Stainless Steel Joint Venture (South Africa).
"Probably the most powerful achievement of the integration teams was to initiate new and innovative thinking about how we create value across our businesses. The merger presented a unique opportunity to do this; it delivered a distinctive new combination of assets, with a global footprint in virtually every significant resource commodity, across the world's key mining regions and across the key customer bases for those products."
Mr Anderson said strong EBIT contributions were recorded from the Customer Sector Groups (excluding exceptional items), with Carbon Steel Materials (up US$356 million or 66 per cent), Petroleum (up US$346 million or 33 per cent) and Energy Coal (up US$245 million or179 per cent) being the standout performers.
"The Customer Sector Groups (CSGs) will have significant autonomy to manage and grow their businesses within a centralised capital deployment discipline. They will be as outwardly focussed on their markets and customers, as on the efficient management of the assets themselves."
"Each of the CSGs is currently reviewing its portfolio, developing its strategy and business plan, and establishing detailed plans to deliver the merger benefits."
Steel Public Listing
The public listing of BHP Billiton Limited's remaining Steel business is on track for completion by the end of FY2002. Progress to date has been significant and includes the agreement of key objectives and establishment of project teams. A selection process is also currently underway for the Chairman and a number of key senior appointments, including the Board and management, are anticipated in coming months.
Commenting on the global commodity outlook, Mr Anderson said: "While we may be less than happy with the current prices of copper or nickel, we take some comfort that our overall portfolio provides diversification markedly superior to most companies in the resources sector."
"This diversification enables us to have a much stronger and more stable cash flow stream; to be able to be more opportunistic during stages of the market cycle where opportunities are appropriately valued; and to have a level of dispassion about the longevity of individual assets in the portfolio which a smaller player would find difficult."
"We have a powerful combination of exchange traded commodities (aluminium, copper and nickel) and, just as importantly, a broad spread of negotiated, non-terminal commodities such as metallurgical and energy coal, manganese and iron ore. Our positions in titanium minerals and diamonds, while not large businesses in their own right, provide us with further diversification."
"There are also other factors which differentiate the BHP Billiton portfolio. Of particular significance is the inclusion of oil and gas, which makes the Group unique from its diversified peers."
"We have clearly stated that the Petroleum business is a key part of the portfolio. Its high quality assets, strong financial performance, significant earnings contribution and growth potential make Petroleum an important part of the BHP Billiton Group."
"In addition, we have flagged our strategic intent to develop an energy capability, encompassing our energy coal, liquids and potentially expanded LNG presence."
Mr Anderson said: "In this current financial year you will see BHP Billiton gather even greater momentum; an unfolding of our strategic direction; commitment to further growth projects; and a willingness and capability to participate in industry consolidation as appropriate value opportunities present themselves."
"The momentum of the two teams and a shared vision of value creation brought us together in the merger. Now the combined BHP Billiton Group is far greater than the sum of its previous parts and we look forward to delivering continued outstanding performance."
BHP Billiton is a world leading diversified resources Group and creates value through the discovery, development and conversion of natural resources and the provision of innovative customer and market-focused solutions. The Group is a Dual Listed Company, comprised of BHP Billiton Limited and BHP Billiton Plc, and is headquartered in Australia.
Further information about the BHP Billiton Group can be found at:
Dr. Robert Porter
Vice President Investor & Media Relations
Phone: +61 3 9609 3540
Mobile: +61 419 587456
e-mail: Robert Porter
Manager Media Relations
Phone: +61 3 9609 4157
Mobile: +61 419 546 245
e-mail: Mandy Frostick
Vice President Investor Relations & Communication
Phone: +44 20 7747 3956
Mobile: +44 7768 264 950
Fax: +44 20 7747 3914
e-mail: Marc Gonsalves
Vice President Investor & Media Relations
Phone: +27 11 376 3360
Mobile: +27 82 458 2587
Fax: +27 11 376 3362
e-mail: Mike Campbell
Manager Investor Relations
Phone: +1 713 961 8625
Mobile: +1 713 480 3699
e-mail: Francis McAllister