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BHP Billiton Plc - Results For The Quarter Ended 30 September 2002
BHP Billiton Plc
Share Code: BIL
ISIN Code: 0000566504
31 October 2002
BHP BILLITON RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2002
Continued strong performance from diversified asset base, despite weak
markets.
EBITDA maintained at robust US$1.2 billion.
EBIT of US$844 million, attributable profit of US$572 million and earnings
per share of 9.2 US cents (all before exceptional items).
Interim dividend of 7.0 US cents per share declared, an increase of 7.7%.
Commissioning of Escondida Phase IV and San Juan Underground projects.
Moody`s upgrade long term credit rating to A2 and short term credit rating to
P-1.
Inaugural (euro) 750 million Eurobond successfully launched in October
2002.
2002 2001 (1) Change
Quarter ended 30 US$M US$M %
September
Turnover (2) 3 922 3 811 2.9%
EBITDA (2) (3) 1 230 1 248 -1.4%
EBIT (2) (3) 844 867 -2.7%
Attributable profit (3) 572 566 1.1%
Basic earnings per share 9.2 9.4 -2.1%
(US cents) (3)
EBITDA interest coverage 12.2 9.0 35.6%
(times) (3) (4)
(1) From continuing operations, excluding the results of the Group`s Steel
business which was demerged in July 2002. Refer page [7].
(2) Including the Group`s share of joint ventures and associates.
(3) There were no exceptional items in relation to continuing operations in
either period.
(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) and are unaudited. Financial results
prepared under Australian GAAP are provided on page [11].
All references to the corresponding period are to the quarter ended 30
September 2001.
RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2002
CHIEF EXECUTIVE`S REVIEW
Stability and Growth
The foundation of the BHP Billiton business model is its diversified
portfolio of high quality assets which provides more stable cash flows and
greater capacity for growth than the traditional resource cyclicals. The
results achieved in the current quarter continue to support that thesis.
Despite weak prices for many of our commodities and self-imposed cut-backs at
some of our major operations, our earnings before interest, tax, depreciation
and amortisation (EBITDA) remained stable at US$1.2 billion.
In October 2002, Moody`s Investor Services upgraded the Group`s long term
credit rating to A2 from A3 and the short term credit rating to P-1 from P-2.
This upgrade reflects the successful combination of the Group`s operations
following the merger in June 2001, the benefit of a diversified portfolio and
our continued focus on prudent financial policies. Standard & Poor`s rating
for the Group remains on positive watch after being upgraded in September
2001 to its current long term credit rating of A and short term credit rating
of A-1.
Our growth projects continue to be on or ahead of schedule and in line with
budget. Notable milestones were the mechanical completion and commissioning
of Escondida Phase IV (Chile), and the commencement of the underground
longwall operation at San Juan (US).
Our robust cash flows support an increase in the dividend to 7.0 US cents per
share, up 7.7% on the corresponding period.
The Income Statement
The discussion in this section, unless otherwise stated, is based on
continuing operations, excluding exceptional items and the Group`s Steel
business, which was demerged in July 2002.
Turnover rose by 2.9% to US$3,922 million. Earnings before interest and tax
(EBIT) were US$844 million, a fall of 2.7%. Pages 5 to 6 detail the key
variances affecting turnover and EBIT.
Net interest on borrowings and cash fell from US$138 million to US$101
million, principally driven by lower market interest rates and lower average
debt levels.
Exchange gains on net debt were US$31 million compared with US$82 million in
the corresponding quarter, mainly in relation to Rand and Canadian
denominated debt.
The tax charge was US$193 million, representing an effective rate of 24.8%.
Excluding the impact on tax of non tax-effected foreign currency gains and
other functional currency translation adjustments, the effective rate was
33.2%, in line with the corresponding period
Attributable profit was US dollar 572 million, an increase of 1.1%.
Basic earnings per share was 2.1% lower at 9.2 US cents per share. The BHP
Billiton Plc equalisation bonus issue associated with the BHP Steel demerger
is reflected in earnings per share calculations from 1 July 2002. Earnings
per share calculations in the corresponding period have not been restated.
Discontinued Operations / Exceptional Items
The demerger of the Group`s Steel business was completed in July 2002. The
6% interest in BHP Steel retained by BHP Billiton was sold in July 2002 for
US dollar 75 million and the loss of US$19 million associated with this sale
has been recognised in the reporting quarter and is disclosed as an
exceptional item in relation to discontinued operations. The contribution of
the Group`s Steel business in the corresponding period has been disclosed as
discontinued operations.
Capital Management
The Group`s inaugural Eurobond issue under the Euro Medium Term Note program
took place in early October 2002 with the issue of Euro750 million of five
year notes. The issue, which was swapped into US dollar, was oversubscribed
and priced at the lower end of market expectations. The success of this
issue in the prevailing market conditions reflects the Group`s strong credit
profile.
The US dollar1.25 billion 364-day revolving credit component of the US dollar
2.5 billion syndicated multi-currency revolving credit facility that was due
for expiry in September 2002, was extended for a further period of 364 days
to September 2003.
Outlook
The global economy remains weak, with China among the few countries to show
growth. Although petroleum prices have risen with geo-political tensions in
the Middle East, and rising steel production in North East Asia and China
continues to support the iron ore and metallurgical coal markets, the prices
of many of our products remain at very low levels. We anticipate that the
current quarter will be just as difficult as the last.
Annual General Meeting
The Annual General Meetings of BHP Billiton Limited and BHP Billiton Plc will
both be held simultaneously on Monday 4 November 2002 in Melbourne and in
London, and will be linked by video. The meeting in Melbourne will be held
at the Melbourne Concert Hall at the Victorian Arts Centre and will commence
at 7.30pm. The meeting in London will be held at the Millennium Hotel,
Mayfair, London and will commence at 8.30am.
Dividend
A dividend of 7.0 US cents per share will be paid to BHP Billiton Limited and
BHP Billiton Plc shareholders on 4 December 2002. The previous dividend was
6.5 US cents per share and was paid in July 2002. The BHP Billiton Limited
dividend will be fully franked for Australian taxation purposes.
Dividends for the BHP Billiton Group are determined and declared in US
dollars. However, 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 announcement date are
used for conversion, and are detailed below.
The timetable in respect of this dividend will be:
Currency conversion 29 October 2002
Last day to trade Johannesburg Stock Exchange (JSE) 8 November 2002
Ex-dividend Australian Stock Exchange (ASX) 11 November 2002
Ex-dividend Johannesburg Stock Exchange (JSE) 11 November 2002
Ex-dividend London Stock Exchange (LSE) 13 November 2002
Record 15 November 2002
Ex-dividend Euronext Paris 16 November 2002
American Depositary Shares (ADSs) each represent two fully paid ordinary
shares and receive dividends accordingly. The record date for ADSs is 14
November 2002.
BHP Billiton Plc shareholders registered on the South African section of the
register will not be able to dematerialise or rematerialise their
shareholdings, nor will they be able to effect transfers between the UK
register and the South African register between the dates of 11 November 2002
and 15 November 2002.
The following table details the exchange rates applicable for conversion of
the dividend payable on 4 December 2002:
Dividend per
Exchange ordinary
share in
Dividend 7 US Rate local
cents currency
Australian 0.5590 12.5224
cents
British pence 1.5575 4.4944
South African 10.0300 70.2100
cents
New Zealand 0.4895 14.3003
cents
Canadian cents 1.5635 10.9445
TRADING REVIEW
EBIT
The following table details major factors affecting EBIT.
Total
US$M
EBIT for the quarter ended 30 September 2001 867
Change in volumes 60
Change in sales prices (40)
Price-linked costs (15)
Inflation on costs (50)
Cost efficiency 15
New and acquired operations 10
Ceased, sold and discontinuing operations (40)
Exchange rates 55
Exploration 20
Other items (38)
EBIT for the quarter ended 30 September 2002 844
Volumes
Higher sales volumes of titanium minerals, nickel, petroleum products,
metallurgical coal and diamonds were partly offset by lower sales volumes of
copper, resulting in a positive net volume impact on EBIT of approximately
US$60 million.
Prices
Lower prices for export energy coal, diamonds, aluminium, alumina and silver
decreased turnover by approximately US$125 million. This decrease was partly
offset by higher prices for petroleum products and nickel which increased
turnover by approximately US dollar 85 million.
Costs
Favourable operating costs increased EBIT by approximately US$15 million
compared with the corresponding period. The Group`s cost reduction
initiatives and reduced maintenance costs at Hillside (South Africa) lowered
costs by approximately US$45 million. These factors were partially offset by
higher costs at Queensland Coal, due to roof control problems, higher
operating costs at Bass Strait and an unfavourable cost variance at Escondida
due to the lower production levels. The Group remains on track to deliver
the US$270 million in merger benefits by the end of this financial year.
Increases in price-linked costs depressed EBIT by approximately US$15
million, mainly due to higher royalties and taxes for petroleum products,
partially offset by lower London Metals Exchange (LME) linked costs in
Aluminium.
Costs increased by approximately US$50 million due to inflationary pressures.
New and acquired operations
New and acquired operations increased EBIT by approximately US$10 million due
to the higher ownership interest in Cerrejon Zona Norte (Colombia) from
February 2002 and the commencement of commercial production at Antamina
(Peru) in November 2001.
Ceased, sold and discontinuing operations
The corresponding period included contribution to EBIT of approximately
US$40 million, mainly from PT Arutmin (Indonesia), divested in November 2001,
and Rietspruit energy coal mine (South Africa), which was closed in May 2002.
Exchange rates
Foreign currency fluctuations had a favourable effect of approximately US$55
million. This was mainly due to the impact of lower Rand/US$ exchange rates
on operating costs and the conversion of monetary assets and liabilities
(approximately US$45 million), together with reduced losses on legacy A$/US$
currency hedging (approximately US$40 million) compared with the
corresponding period. This was partly offset by the impact of stronger
A$/US$ exchange rates on operating costs and the conversion of monetary
assets and liabilities (approximately USdollar25 million).
Exploration
Exploration expense was down by approximately Us dollar 20 million.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(prepared in accordance with UK GAAP)
US$ millions
2002 2001
Discon-
tinued
Operations Total Conti- Disco Excep-
Continuing Exceptional nuing ntinued tional
Operations Items Operati- Opera- Item
Quarter ended
30 September
Turnover
(including share
of joint ventures
and associates) 3 922 - 3 922 3 811 650
Less: share of
joint ventures and
associates`
turnover (478) - (478) (246) (47)
Group turnover 3 444 - 3 444 3 565 603 -
Net operating
costs (excluding
depreciation
and amortisation) (2 305) - (2 305) (2 400) (530)
Depreciation and
amortisation (b) (386) - (386) (381) (34)
Group
operating profit 753 - 753 784 39 -
Share of operating
profit/(loss) of
joint ventures
and associates 85 - 85 72 (1) -
Operating profit
(including share
of profit of joint
ventures and
associates) 838 - 838 856 38 -
Income from
other fixed
asset investments 3 - 3 6 -
Profit on
sale of fixed
assets 3 - 3 5 16
Loss on sale of
discontinued
operations - (19) (19) - -
Profit before net
interest and similar
items payable,
and
taxation
(EBIT) (a) 844 (19) 825 867 54
Net interest and
similar items
payable (1)
- Group (49) - (49) (64) 1
- Joint ventures
and associates (18) - (18) 1 (3)
Profit before
Taxation 777 (19) 758 804 52
Taxation (1) (193) - (193) (228) (9)
Profit after
Taxation 584 (19) 565 576 43
Equity minority
Interests (12) - (12) (10) (1)
Attributable
Profit 572 (19) 553 566 42
EBITDA
[(a) + (b)] 1 230 (19) 1 211 1 248 88
Earnings per
ordinary share
(basic)
(US cents) (2) 9.2 (0.3) 8.9 9.4 0.7
Earnings per
ordinary
share (diluted)
(US cents) (3) 9.2 (0.3) 8.9 9.4 0.7
(1) Net interest shown against discontinued operations includes that amount
of net external interest which is directly attributable to the discontinued
operations. Taxation is the nominal charge on the profit before taxation.
(2) Based on attributable profit divided by the weighted average number of
ordinary shares (ranking for dividend). The weighted average number of
ordinary shares for the quarter ended 30 September 2002 was 6,196 million
(2001 : 6,024 million). The BHP Billiton Plc equalisation bonus issue
associated with the BHP Steel demerger is reflected in the weighted average
number of ordinary shares from 1 July 2002. The weighted average number of
shares used for the purposes of calculating basic earnings per ordinary share
is calculated after deduction of the shares held by the Billiton Employee
Share Ownership Trust, adjusted for the BHP Billiton Limited bonus issue
effective 29 June 2001.
(3) Based on attributable profit divided by the weighted average diluted
number of ordinary shares. The weighted average diluted number of ordinary
shares iscalculated by adjusting the weighted average basic number of
ordinary shares for the effect of options, partly paid shares and the
executive share awards which are dilutive at 30 September 2002. The weighted
average diluted number of ordinary shares for the quarter ended 30 September
2002 was 6,207 million (2001 : 6,039 million). The BHP Billiton Plc
equalisation bonus issue associated with the BHP Steel demerger is reflected
in the weighted average diluted number of ordinary shares from 1 July 2002.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the Customer Sector Group results
for the quarter ended 30 September 2002 and the comparative period.
Quarter ended 30
September
(US$ Million) Turnover (1) EBIT (2)
2002 2001 Change 2002 2001 Change
% %
Petroleum 817 787 3.8 384 325 18.2
Aluminium 777 698 11.3 135 114 18.4
Base metals 389 359 8.4 16 53 -69.8
Carbon steel materials 851 830 2.5 267 292 -8.6
Diamonds and speciality 333 383 -13.1 70 65 7.7
products
Energy coal 428 538 -20.4 68 149 -54.4
Stainless steel 220 214 2.8 23 (11)
materials
Group and unallocated 185 145 27.6 (119) (120) 0.8
items
BHP Billiton Group from 3 3 811 2.9 844 867 -2.7
continuing operations 922
(1) Turnover does not add to BHP Billiton Group due to intersegment
transactions.
(2) EBIT is earnings before interest and taxation (excluding exceptional
items).
An explanation of the factors influencing EBIT, including joint ventures and
associates (excluding exceptional items) by Customer Sector Group, is as
follows:
Petroleum
Petroleum contributed EBIT of US$384 million, up from US$325 million, an
increase of 18.2% compared with the corresponding period.
The increase in EBIT was due mainly to a higher average realised oil price of
US$26.97 per barrel compared to US$25.97 per barrel in the corresponding
period together with a higher average realised liquefied petroleum gas (LPG)
price of US$241.53 per tonne compared to US$233.64 per tonne in the
corresponding period. Sales volumes at North West Shelf (Australia) and
Bass Strait were higher as a result of timing of shipments and strong
production, partly offset by lower oil and condensate production at Liverpool
Bay (UK), which was mainly due to scheduled shutdowns, and lower oil
production at Griffin (Australia) resulting from natural field decline. In
addition, EBIT was favourably impacted by lower petroleum exploration costs
in the current period.
These factors were partly offset by higher costs as a result of an increase
in price-linked costs (royalties and taxes) and higher operating costs at
Bass Strait.
Aluminium
Aluminium contributed EBIT of US$135 million, up from US$114 million, an
increase of 18.4% compared with the corresponding period.
The increase in EBIT was mainly attributable to lower maintenance costs at
Hillside, with the completion of the pot-relining program in June 2002, lower
operational costs at Hillside and Worsley (Australia) as a result of the
continued success of operational excellence projects and the end of power
restrictions in Brazil. The weakening of the Rand/US$ and Brazilian Real/US$
exchange rates also had a favourable impact on operating costs.
These factors were partially offset by the lower average LME price for
aluminium, down US$69 per tonne or 5%.
Base Metals
Base Metals contributed EBIT of US$16 million, down from US$53 million, a
decrease of 69.8% compared with the corresponding period.
The EBIT reduction was mainly due to lower volumes at Escondida and Tintaya
(Peru), reflecting the decision to temporarily reduce production in reaction
to the global deterioration of base metals markets. A decline in the average
realised price for silver also had an unfavourable impact on EBIT.
These factors were partly offset by the contribution from Antamina which
commenced commercial operations in November 2001.
Carbon Steel Materials
Carbon Steel Materials contributed EBIT of US$267 million, down from US$292
million, a decrease of 8.6% compared with the corresponding period.
The decrease in EBIT was mainly attributable to the unfavourable impact of
stronger A$/US$ exchange rates on operating costs compared to the
corresponding period, together with higher costs reported at Queensland Coal
operations due to continued roof control problems at Crinum and plant
maintenance activities.
These factors were partially offset by significantly increased market demand
for manganese alloy and strong demand from Asian markets for West Australian
iron ore resulting in record shipping volumes during the September 2002
quarter.
Diamonds and Specialty Products
Diamonds and Specialty Products contributed EBIT of US$70 million, up from
US$65 million, an increase of 7.7% compared with the corresponding period.
The increase in EBIT was primarily due to higher earnings from the titanium
minerals operations mainly due to timing of shipments, together with
increased diamond production, mainly due to increased plant throughput and
processing efficiencies.
These factors were partially offset by lower average realised diamond prices
as a result of a change in product mix compared with the corresponding
period.
Energy Coal
Energy Coal contributed EBIT of US$68 million, down from US$149 million, a
decrease of 54.4% compared with the corresponding period.
The decrease in EBIT was primarily due to a significant decline in export
market prices, with average prices 19% below the corresponding period.
Export prices reached a low early in the quarter before improving over the
balance of the period. Equity sales volumes decreased by 12% as a result of
the divestment of PT Arutmin and the closure of the Rietspruit mine.
These factors were partially offset by the favourable impact of the weakening
Rand/US$ exchange rates on operating costs and the contribution from the
additional interest acquired in the Cerrejon Zona Norte operation.
Stainless Steel Materials
Stainless Steel Materials contributed EBIT of US$23 million, compared with a
loss of US$11 million in the corresponding period.
The increase in EBIT was driven by higher realised prices for nickel, up by
20%, together with a 20% increase in nickel production reflecting the
continued ramp-up of production from Cerro Matoso Line 2 (Colombia), and
higher recoveries at QNI (Australia), along with the favourable effect of the
lower Rand/US$ exchange rate on operating costs in Chrome.
Group and Unallocated Items
Corporate overheads for the quarter decreased by US$12 million to US$49
million, from US$61 million in the corresponding period. Losses on legacy
A$/US$ currency hedging also decreased to US$55 million from US$93 million in
the corresponding period. These decreases were partly offset by the
unfavourable impact of the strengthening A$/US$ exchange rate on operating
costs and other one-off items.
STATEMENT OF FINANCIAL PERFORMANCE
(prepared in accordance with Australian GAAP)
Quarter ended 30 September 2002 2001
US$M US$M
Revenue from ordinary activities
Sales 3 457 4 150
Other revenue 70 90
3 527 4 240
Profit from ordinary activitites before
depreciation, amortisation and borrowing 1 251 1 455
costs
Deduct: Depreciation and amortisation 397 426
Borrowing costs 90 155
Profit from ordinary activities before 764 874
tax
Deduct: Tax expense attributable to 209 267
ordinary activities
Net 555 607
profit
Outside equity interests in net profit (13) (10)
Net profit attributable to members of
combined BHP Billiton Group 542 597
Basic earnings per fully paid ordinary 8.7 9.9
share (US cents)
Basis of Preparation
The results of the BHP Billiton Group, comprising BHP Billiton Limited and
BHP Billiton Plc, for the quarter ended 30 September 2002, and the
corresponding period, have been prepared in accordance with Australian GAAP
and Practice Note 71 `Financial reporting by Australian entities in dual
listed company arrangements` issued by the Australian Securities and
Investments Commission (ASIC).
The financial information has been prepared using the same accounting
policies as were used in preparing the results for the BHP Billiton Group as
presented in the BHP Billiton Limited financial statements for the year ended
30 June 2002.
The results are unaudited.
Further news and information can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom
Andrew Nairn, Investor Relations Mark Lidiard, Investor & Media
Tel: + 61 3 9609 3952 Mobile: Relations
+61 408 313 259 Tel: +44 20 7747 3956
email: email:
Andrew.W.Nairn@bhpbilliton.com Mark.Lidiard@bhpbilliton.com
Mandy Frostick, Media Relations South Africa
Tel: +61 3 9609 4157 Mobile: +61 Michael Campbell, Investor & Media
419 546 245 Relations
email: Tel: +27 11 376 3360
Mandy.J.Frostick@bhpbilliton.com Mobile: +27 82 458 2587
email:
Michael.J.Campbell@bhpbilliton.com
United States
Francis McAllister, Investor
Relations
Tel: +1 713 961 8625 Mobile: +1
713 480 3699
email:
Francis.R.McAllister@bhpbilliton.com
BHP Billiton Limited BHP Billiton Plc Registration
ABN 49 004 028 077 number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 600 Bourke Street Registered Office: 1-3 Strand
Melbourne Victoria 3000 London WC2N 5HA United Kingdom
Telephone +61 3 9609 3333 Facsimile Telephone +44 20 7747 3800
+61 3 9609 3015 Facsimile +44 20 7747 3900
The BHP Billiton Group is headquartered in Australia
Date: 31/10/2002 09:55:54 AM Produced by the JSE SENS Department
