| Thu 2 May 2002, 0:00 | | Bhp Billiton Results For The Quarter Ended 31 Marc |
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BHP Billiton Plc
HIGHLIGHTS
- Sound quarterly result in the face of difficult market conditions with
strong cash generation as evidenced by EBITDA of US$1.2 billion.
- Turnover US$4.3 billion, EBITDA US$1.2 billion and attributable profit
US$406 million.
- Financial year to date turnover US$13.2 billion, EBITDA US$3.7 billion and
attributable profit US$1.6 billion.
- Final dividend of 6.5 US cents to be paid on 3 July 2002.
- Commitment to growth - US$2.4 billion in new growth projects sanctioned
since the merger.
- Little evidence of increases in demand by the ultimate customers of many
of our products.
- BHP Steel demerger on track for completion about the middle of this year.
Quarter ended 31 Nine months ended
March 31 March
2002 2001 2002 2001
US$M US$M US$M US$M
Group turnover (1) 4 282 4 674 13 176 14 070
EBITDA (1) (2)
- excluding 1 184 1 397 3 698 4 077
exceptional items
- including 1 184 877 3 698 3 557
exceptional items
EBIT (1) (3)
- excluding 761 970 2 412 2 840
exceptional items
- including 761 450 2 412 2 320
exceptional items
Attributable profit
- excluding 406 604 1 604 1 762
exceptional items
- including 406 194 1 604 1 352
exceptional items
Basic earnings per
share (US cents)
- excluding 6.7 10.1 26.6 29.7
exceptional items
- including 6.7 3.2 26.6 22.8
exceptional items
EBITDA interest coverage
(times) (4)
- excluding 15.6 8.6 10.8 8.9
exceptional items
- including 15.6 5.4 10.8 7.7
exceptional items
(1) Including the group's share of joint ventures and associates.
(2) EBITDA is profit before net interest, taxation, and depreciation and
amortisation.
(3) EBIT is profit before net interest and taxation.
(4) For this purpose, net interest includes capitalised interest and
excludes the effect of discounting on provisions and exchange differences
arising from net debt.
The above financial results are prepared in accordance with UK generally
accepted accounting principles (GAAP). Financial results prepared under
Australian GAAP are provided on page 32.
Financial Review
Basis of Preparation of Financial Information
The quarterly financial information presented in this release is provided
voluntarily by the BHP Billiton Group consistent with international best
practice to ensure an informed market. The results are unaudited.
The financial results included in this release are prepared in accordance
with UK generally accepted accounting principles (GAAP). On 29 June 2001,
BHP Billiton Limited and BHP Billiton Plc entered into a Dual Listed
Companies (DLC) merger. Under UK GAAP the DLC merger is accounted for using
the merger method of accounting. The results of the BHP Billiton Limited
Group and the BHP Billiton Plc Group for the period have been combined and
the prior period results have been prepared as if the companies have always
been combined. The reporting currency is US dollars which is the dominant
currency in which the BHP Billiton Group operates.
The combined results for the quarter ended 31 March 2002, prepared in
accordance with UK GAAP, are generally consistent with the combined results
under Australian GAAP as required by the Australian Securities and
Investments Commission (ASIC) in respect of dual listed companies. However,
in contrast to UK GAAP, Australian regulatory requirements do not allow the
combination of the results of the BHP Billiton Limited Group with those of
the BHP Billiton Plc Group for periods prior to consummation of the DLC
merger on 29 June 2001. Financial results prepared in accordance with
Australian GAAP are provided on page 32.
With effect from 1 July 2001, the majority of the BHP Billiton Limited
Group's businesses changed their reporting currencies to US dollars, the
functional currency of the combined BHP Billiton Group. This is consistent
with the BHP Billiton Plc Group and is the basis on which the combined BHP
Billiton Group manages its businesses. Most BHP Billiton commodities are
sold in US dollars and are predominantly destined for export markets.
Except for the effect of the functional currency change, the financial
information has been prepared on the same basis and using the same
accounting policies as were used in preparing the results for the BHP
Billiton Group as presented in the BHP Billiton Plc Group financial
statements (but not the BHP Billiton Limited financial statements) for the
year ended 30 June 2001.
The financial information included in this release provides an analysis of
the results for the quarter ended 31 March 2002 compared with the quarter
ended 31 March 2001. All references to the corresponding period are to
either quarter ended 31 March 2001 or the nine months ended 31 March 2001 as
applicable.
Turnover
Turnover for the quarter, including the group's share of joint ventures and
associates, decreased by 8.4% to US$4,282 million mainly due to the
generally weaker economy compared with the corresponding period. Prices
were lower for crude oil, aluminium, diamonds, nickel, liquefied natural
gas (LNG) and ferrochrome. Turnover was also impacted by lower sales
volumes from Base Metals, Titanium Minerals, Petroleum and Energy Coal
businesses. These factors were partly offset by higher prices for
metallurgical coal and energy coal. Turnover, including the group's share
of joint ventures and associates was US$13,176 million, for the nine months
ended 31 March 2002, down by US$894 million or 6.4% compared with the
corresponding period.
EBIT
Earnings before interest and tax (EBIT) before exceptional items for the
quarter ended 31 March 2002 was US$761 million, down by US$209 million or
21.5%. EBIT for the nine months ended 31 March 2002 was US$2,412 million,
down by US$428 million or 15.1%.
The following table details the approximate impact of major factors
affecting EBIT for the quarter ended 31 March 2002.
US$M
EBIT for the quarter 970
ended 31 March 2001
Change in sales ( 180 )
prices
Change in volumes ( 30 )
Price linked 55
costs
Inflation on ( 40 )
costs
Costs ( 10 )
New and acquired 20
operations
Ceased, sold and ( 60 )
discontinuing operations
Exchange rates 70
Asset sales ( 30 )
Exploration 15
Other items ( 19 )
EBIT for the quarter 761
ended 31 March 2002
Prices
Lower prices for crude oil, aluminium, diamonds, nickel and ferrochrome
caused turnover to fall by approximately US$260 million. Higher
metallurgical coal and energy coal prices offset this by approximately US$80
million.
Volumes
Lower sales volumes resulted in a reduction of EBIT by approximately US$30
million. Volumes were down in the Base Metals, Titanium Minerals,
Petroleum, and Energy Coal businesses, but volumes increased in the
Aluminium, Stainless Steel Materials, Ekati and Carbon Steel Materials
businesses.
Costs
Net cost reductions (before inflation) increased EBIT by approximately US$45
million compared to the corresponding period. Lower price linked costs for
London Metals Exchange (LME) listed commodities, together with lower
royalties and taxes for petroleum products, resulted in cost reductions
totalling approximately US$55 million. Costs increased during the period
due to higher business development costs and maintenance costs at Petroleum,
and operational issues at Energy Coal operations (South Africa),
Metallurgical Coal operations (Australia) and Chrome operations (South
Africa). These factors were partly offset by lower maintenance expenditure
at Hillside (South Africa), lower transportation and distribution costs at
Iron Ore operations (Western Australia) and at Hunter Valley coal
(Australia). Inflation increased costs by approximately US$40 million.
New and acquired operations
New and acquired operations contributed approximately US$20 million to EBIT
mainly due to increased ownership interest in the Worsley alumina refinery
and the acquisition of an additional 29% interest in the Ekati diamond
business.
Ceased, sold and discontinuing operations
Ceased, sold and discontinuing operations caused EBIT to reduce by
approximately US$60 million. Lower Steel profits reduced EBIT by
approximately US$35 million. The corresponding period included contribution
to EBIT of approximately US$25 million from a higher ownership interest in
metallurgical coal (Queensland) and an EBIT contribution from Indonesian
energy coal operations.
Foreign exchange
Foreign currency fluctuations had a favourable effect of approximately US$70
million mainly due to the impact of lower Rand/US$ and A$/US$ exchange rates
on related operating costs, partially offset by the translation effect on
provision balances.
Asset sales
Profits from asset sales were approximately US$30 million lower, mainly due
to the profit on sale of the Buffalo (Australia) oilfield and the Ohanet
(Algeria) farmout in the corresponding period.
Exploration
Exploration charged to profit was approximately US$15 million lower
reflecting mainly higher capitalisation of Petroleum activities in the
current period.
Net Interest
The benefits of the re-rating of the Group and lower interest rates,
together with an interest receipt of US$15 million on the successful outcome
of the Utah tax case, reduced net interest from US$160 million to US$75
million in the quarter.
For the quarter, exchange losses arising from net debt were US$22 million
compared with an exchange gain of US$59 million in the corresponding period,
primarily arising on the quarter end translation of Rand denominated debt of
companies which account in US dollars as their functional currency.
Approximately 1.1 billion of Rand denominated debt was repaid during the
quarter.
For the nine months ended 31 March 2002 net interest payable, including
capitalised interest, before discounting on provisions and exchange
differences arising from net debt, reduced from US$459 million to US$344
million. Exchange gains arising from net debt were US$220 million compared
with US$154 million in the corresponding period.
EBITDA interest coverage (excluding exceptional items, exchange differences
arising on net debt and discounting on provisions) was 15.6 times for the
quarter and 10.8 times for the nine months, increased from 8.6 times and 8.9
times respectively in the corresponding periods.
Taxation
The tax charge for the quarter ended 31 March 2002 before exceptional items
of US$245 million (2001 - US$264 million) represents an effective tax rate
of 37% (2001 - 31%). This is higher than the nominal tax rate of 30%
primarily due to non tax-effected foreign exchange losses on foreign
currency denominated debt and other functional currency translation
adjustments, non tax-effected losses, non deductible accounting depreciation
and amortisation together with secondary taxes on dividends paid or payable
by South African entities. These factors were partly offset by recognition
of prior year tax losses. Excluding the impact of foreign exchange losses
on foreign currency denominated debt and other functional currency
translation adjustments, the effective tax rate for the quarter ended 31
March 2002 was 32%.
The tax charge for the nine months ended 31 March 2002 (before exceptional
items) of US$647 million (2001 - US$744 million) represents an effective tax
rate of 28% (2001 - 29%). Excluding the impact of exchange differences
arising on net debt and other functional currency translation adjustments,
the effective tax rate for the nine months ended 31 March 2002 was 33%.
Earnings
For the quarter, attributable profit (excluding exceptional items) of US$406
million was US$198 million or 32.8% below the corresponding period. On an
earnings per share basis this equates to 6.7 US cents compared to US 10.1
cents. There were no exceptional items in the quarter ended 31 March 2002.
The corresponding period included an exceptional item of US$410 million
associated with the write-off of the equity investment in HBI Venezuela and
the establishment of provisions for related financial obligations to banks.
Attributable profit (including exceptional items) rose by US$212 million or
109.3% to US$406 million compared with US$194 million for the corresponding
period, giving an earnings per share of 6.7 US cents compared to 3.2 US
cents respectively.
For the year to date, attributable profit (including exceptional items) rose
by US$252 million or 18.6% to US$1,604 million compared with US$1,352
million for the corresponding period. This equates to 26.6 US cents
compared to US 22.8 cents on an earnings per share basis. There have been
no exceptional items for nine months ended 31 March 2002. The corresponding
period included the exceptional item as mentioned above. Attributable
profit (excluding exceptional items) for the nine months ended 31 March 2002
of US$1,604 million was US$158 million or 8.9% below the corresponding
period. Earnings per share was 26.6 US cents compared to 29.7 US cents in
the corresponding period.
Growth
Since 1 January 2002, BHP Billiton has committed approximately US$1.4
billion to new growth projects, taking the total since the completion of the
merger, to US$2.4 billion.
The table below highlights projects approved since 1 January 2002. All
references to production volumes and capital expenditure are BHP Billiton's
share, unless otherwise stated.
Customer Project Capital Production Completion
Sector
Group
Expendi-
ture
US$M
Aluminium Hillside 3 450 132,000 Initial producti
expansion tonnes per
annum
South Africa of aluminium mid 2004
metal
BHP Billiton
100%
Carbon Mining Area 186 15 million Initial producti
Steel C tonnes per
Materials
Australia annum of iron late
ore by 2003
BHP Billiton 2011 (100%)
85%
Port & 328 Increase in Late
capacity port capacity 2004
expansion
Australia to 81
millions of
tonnes per
BHP Billiton annum by 2004
85% (100%)
Yandi Lump 14 4 million Initial producti
tonnes per
annum
Australia of iron ore mid 2002
(100%)
BHP Billiton
85%
Petroleum Mag Dog oil 335 20,000 Initial producti
and gas boe/day
field
development late
2004
US
BHP Billiton
23.9%
Gulf of 100 Pipeline Commissi
Mexico capacities oning
(100%)
transportati Oil - 450,000 late
on system bbls per day 2004
US Gas - 500,000
million
BHP Billiton standard
22-25% cubic feet
per day
Zamzama gas 40 300 million Initial producti
field cubic feet of
Pakistan gas per day mid 2003
BHP Billiton
47.5%
During the March 2002 quarter, BHP Billiton announced successful exploration
drilling results from the Kairi-2 well in Block 2(c) in Trinidad. The
results from Kairi-2 provided further evidence of offshore Trinidad's major
hydrocarbon development potential. BHP Billiton has made four commercial
hydrocarbon discoveries in the greater Angostura (Trinidad) area (Kairi,
Angostura, Canteen and Aripo) in the past three years and expects to
sanction a project for development of the Block 2(c) resources during this
calendar year.
Portfolio Management
Since 1 January 2002, BHP Billiton has announced a number of operational and
portfolio management initiatives. These included:
BHP Billiton, in conjunction with Anglo American plc and Glencore
International AG, signed an agreement to acquire all of the ownership
interests in International Colombia Resources Corporation from Exxon Mobil
Corporation. The transaction, completed in February 2002, increases
BHP Billiton's interest in the Cerrejon Zona Norte energy coal mining
operation in Colombia to 33.33% from 16.67%.
BHP Billiton was the successful bidder for 27 hydrocarbon exploration blocks
in the central Gulf of Mexico (US) lease sale in March 2002. Several blocks
provide near-field prospects in the Green Canyon play fairway, where BHP
Billiton has established infrastructure at the Typhoon production facility.
Other leases will replenish the exploration portfolio with opportunities in
the Central Gulf region, which is an area that BHP Billiton has extensive
experience and proprietary knowledge.
The closure of the Tower metallurgical colliery in Australia by December
2002. Tower produces approximately 1.4 million tonnes of coal per annum.
Following closure, this production will be sourced from BHP Billiton's other
mines in the Illawarra region.
BHP Billiton completed its withdrawal from the Ok Tedi copper mine in Papua
New Guinea during the quarter. BHP Billiton transferred its 52% interest to
an independent Program Company that will operate for the benefit of the
people of Papua New Guinea. A series of legal releases, indemnities and
warranties have been established which will protect BHP Billiton from
certain legal liabilities for the period after its exit.
The demerger of BHP Steel from BHP Billiton Limited to BHP Billiton Limited
shareholders is on schedule. The scheme document and prospectus for the
demerger is to be released in May 2002 and Extraordinary Shareholders
Meetings for BHP Billiton Limited and BHP Billiton Plc will seek approval
for the transaction. Given shareholder approvals, the public listing of
BHP Steel is scheduled for about the middle of the calendar year.
BHP Billiton Plc shareholders will be compensated for the distribution to
the shareholders of BHP Billiton Limited by way of a bonus issue.
Business Outlook
Although there have been some signs of a modest improvement in the global
economic environment, concerns remain about the strength and sustainability
of the recovery. Industry stock levels for a number of our major commodities
remain high and we see little evidence of an increase in demand by the
ultimate customers of many of our products. This situation will limit price
increases for those commodities, at least in the short term, and combined
with the weakening of the US dollar, will continue to impact our earnings.
In these challenging conditions, our cash generation remains strong thanks
to the quality of our assets and our well-diversified portfolio. EBITDA for
the quarter was US$1.2 billion (compared to US$1.4 in the corresponding
period last year) and US$3.7 billion for the year to date (compared to
US$4.1 billion).
Dividends
A final dividend of 6.5 US cents per fully paid ordinary share will be paid
on 3 July 2002 by BHP Billiton Limited and BHP Billiton Plc, bringing the
total dividend for the year to 13.0 US cents. In the corresponding period
BHP Billiton Limited shareholders received at dividend of 24.7 Australian
cents (adjusted for bonus issue) per fully paid ordinary share, and BHP
Billiton Plc shareholders received a dividend of 12 US cents per fully paid
ordinary share.
The BHP Billiton Limited dividend is fully franked for Australian taxation
purposes.
The timetable in respect of this dividend will be :
Currency conversion 29 April 2002
Last day to trade Johannesburg Stock Exchange (JSE) 31 May 2002
Ex-dividend Johannesburg Stock Exchange (JSE) 3 June 2002
Ex-dividend Paris Bourse Stock Exchange 3 June 2002
Ex-dividend London Stock Exchange (LSE) 5 June 2002
Ex- dividend Australian Stock Exchange (ASX) 5 June 2002
Record 7 June 2002
BHP Billiton Limited and BHP Billiton Plc American Depositary Shares (ADSs)
each represent two fully paid ordinary shares and receive dividends
accordingly. The record date for BHP Billiton Limited ADSs is 6 June 2002
and the record date for BHP Billiton Plc ADSs is 7 June 2002.
BHP Billiton Plc shareholders registered on the South African section of the
register, will not be able to dematerialise or rematerialise their share
holdings, nor will they be able to effect transfers between the United
Kingdom (UK) register and the South African register between the dates of
Monday, 27 May 2002 and Friday, 7 June 2002.
As the BHP Billiton Group generates cashflows primarily in US dollars,
dividends are determined and declared in US dollars. BHP Billiton Limited
dividends are mainly paid in Australian dollars and BHP Billiton Plc
dividends are mainly paid in pounds sterling to shareholders on the UK
section of the register and South African Rand to shareholders on the South
African section of the register. The rates of exchange applicable two
business days before the declaration date are used for conversion. For the
July 2002 dividend, conversion from US currency was at exchange rates
applicable on 29 April 2002.
The following table details the exchange rates applicable for conversion of
the final dividend payable on 3 July 2002:
Dividend 6.5 US Exchange Dividend per
cents Rate ordinary share
in local
currency
Australian cents 0.5436 11.9573
British pence 1.4604 4.4508
South African 10.6114 68.9741
cents
New Zealand cents 0.4511 14.4092
Canadian cents 1.5554 10.1101
Portfolio Risk Management
This table summarises the next four quarters as at 31 March 2002 with
respect to the BHP Billiton Group's significant derivative financial
instruments used to hedge Australian dollar costs that are sensitive to
changes in exchange rates for the forthcoming twelve months.
Weighted average A$/US$ Contract amounts
exchange rate
Forwards Call Put A$ US$
options options Million Million
US
dollar
s
Q4 - forwards 1.4697 - - 441 300
2002
- collar - 1.4609 1.5300 73 50
options
- purchased - 1.8182 - 18 10
options
- sold options - - - - -
Q1 - forwards 1.4482 - - 362 250
2003
- collar - 1.4273 1.4912 43 30
options
- purchased - 1.8182 - 55 30
options
- sold options - - - - -
Q2 - forwards 1.4797 - - 355 240
2003
- collar - 1.4611 1.5279 15 10
options
- purchased - 1.8182 - 55 30
options
- sold options - - - - -
Q3 - forwards 1.5489 - - 325 210
2003
- collar - 1.4686 1.5363 29 20
options
- purchased - - - - -
options
- sold options - - - - -
Commodity price risk management
As at 31 March 2002 there were no significant commodity price derivative
financial instruments outstanding.
Strategic financial transactions
As at 31 March 2002 there were no strategic financial derivative
transactions outstanding.
EXCHANGE RATEs
The following exchange rates have been utilised in this report:
