This summary is based on the full year 2007 earnings call conducted by BHP Billiton Ltd. (BHP) on August 22, 2007.
Management:
CEO and Executive Director: Charles Goodyear
Group Executive and Chief Executive Non-Ferrous and Executive: Marius Kloppers
Group Executive and Chief Executive Petroleum: J. Michael Yeager
Group Executive and CFO: Alexandre Vanselow
Key Investors Issues
- Attributable profit came in at $13.7 billion, up 35% from prior year.
- Project pipeline stands at 33 projects, with almost $21 billion of growth.
- The company declared a final dividend of 27 cents per share.
- The company expects significant volume growth in 2008 in oil, copper, iron ore and nickel.
Full Year 2007 Highlights
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Revenues were up 21% to $47.5 billion from $39 billion in 2006.
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EBIT was $20.1 billion, up 31%, resulting in attributable profit of $13.7 billion.
- Bulk of cost increases related to costs recouped in revenue lines, such as fuel and energy.
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Earnings per share rose 39% to $4.34 per share due to the share buyback program.
- Priorities for cash flow remain re-investing in value accretive opportunities and returning funds to shareholders.
- The company repurchased 305 million shares with 85% already cancelled.
- Remaining share buybacks worth $6.7 billion are expected to be completed by August 2008.
- Final dividend of 27 cents per share declared which is 46% greater than the final payment in 2006, and 35% ahead of interim dividend declared earlier in the year.
The balance sheet remained strong with gearing of 25% despite capital investments, increased share buybacks, and a progressive dividend policy.
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Injury frequency rate decreased 17% following improvements in most business units, though eight fatalities were noted.
- The management is committed to increase focus on the implementation of fatal risk control protocols, and pushing down the injury frequency rate.
Key performance drivers include:
- Superior resource position allowing production growth in a high-margin, low-risk way.
- A well diversified commodity mix.
- High-margin oil and gas business that will deliver high value growth.
- Marketing structure which lowers risk and adds value to customers.
Performance Analysis of Customer Segment Groups
Petroleum:
- Revenues rose 12.5% from $5.2 billion in 2006 to $5.9 billion.
- EBIT growth was flat compared to last year, rising 1.5% to $3 billion due to higher oil prices per barrel of $63.9 against $61.9 in 2006 and higher prices for liquefied petroleum gas of $530 per tonne compared to $484 per tonne in 2006.
- Production volumes were in line with last year despite no new major project start ups.
- The impact of foreign exchange (A$ and GBP) and price-linked costs was unfavorable.
The company acquired a 44% interest in the Genghis Khan oil and gas field.
- Genghis Khan, Atlantis and Neptune, Stybarrow (Australia) and Zamzama Phase 2 (Pakistan) are scheduled to commision within the next six months, increasing petroleum production.
- Expenditure on exploration at $395 million was $52 million lower than the prior year.
Aluminium:
