BHP Group (NYSE:BBL) Q4 2016 Earnings Conference Call - Final Transcript

Aug 16, 2016 • 08:00 am ET


BHP Group (NYSE:BBL) Q4 2016 Earnings Conference Call - Final Transcript


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Andrew Mackenzie

Welcome to our 2016 Annual Results. For those of you on the webcast I am in London and Peter Beaven, our Chief Financial Officer, is joining from Melbourne. So, as usual, we have a disclaimer to remind you of its importance to this presentation.

The 2016 financial year was a difficult one, both for us, BHP Billiton and the resources industry generally. Notwithstanding that, we have achieved I think very solid results in the year and we have done this by being true to our charter values, true to our strategy, and focused on the very few things that really matter. And that means as we begin the new year, we are extremely well placed. We have an even stronger culture of productivity that continues to build and productivity -- let me stress is always to be delivered safely. We have engaged people, we have engaged communities and engaged stakeholders and above all, we have a new, but I think very powerful disciplined approach to capital management.

As usual, let me start with safety. Before I talk about safety, I have to acknowledge the tragic events of Samarco that to some extent casts a cloud over much of what I have to say about the rest of our operations. You know this led to the loss of 19 lives and it has deeply affected me personally and all of us at BHP Billiton. And I am going to go into quite a bit of details on Samarco in a moment. So, while it is hard to be positive about the performance in the rest of our businesses in the shadow of Samarco, I do think it is worth noting that we completed the year at our operated sites with no fatalities and with a significant reduction in significant injuries.

During the 2016 financial year, this focus on safety and productivity has delivered a further reduction in unit costs, it has increased throughput across most of our operations but, as you all know, the significantly weaker commodity prices have more than outweighed this achievement and have led to our underlying EBITDA being down 44% to $12.3 billion and underlying attributable profit down 81% to $1.2 billion. We also during the course of the year recorded three exceptional charges in relation to the Samarco dam failure to the impairment of our onshore US petroleum assets and some ongoing global taxation matters, and that contributed to our statutory loss of $6.4 billion.

We are clearly really disappointed with this result, really disappointed. However, our EBITDA has remained healthy at 41% and we are pleased by the strong cash generation of our assets, which has resulted in a free cash flow of $3.4 billion. As most of you know, during the year, we made a change to our dividend policy, designed to secure our balance sheet and provide flexibility to invest through the cycle. This has been a good decision, it has positioned us well. Our balance sheet is strong. Net debt is broadly unchanged