1st Qtr Results Part 1 of 2
BHP Billiton Limited
7 November 2001
BHP Billiton Limited is issuing this announcement to fulfil disclosure
obligations arising from its secondary listing on the London Stock Exchange.
The text of this release is identical to that issued by BHP Billiton Plc
earlier.
PART 1
Date: 7 November 2001
Number: 29/01
BHP BILLITON ANNOUNCES RECORD QUARTER RESULT OF US$608 MILLION
The BHP Billiton Group (BHP Billiton) today announced a record attributable
profit of US$608 million for the quarter ended 30 September 2001, an increase
of US$19 million or 3.2 per cent compared to the combined figure in the
corresponding period last year.
Earnings Before Interest and Tax (EBIT) was US$921 million. Earnings per share
of US$0.10 for the quarter was unchanged from the corresponding period last
year.
BHP Billiton CEO and Managing Director Paul Anderson said: 'This is a solid
result that was achieved despite the slowdown in the global economy. It
reflects the resilience and earnings capability of our world-class businesses
and our commodity, region and market diversity.
'In the context of an increasingly difficult economic environment - with lower
prices in many of our major commodity businesses including base metals,
petroleum products, aluminium, steel and stainless steel materials - the Group
has delivered a stronger financial performance.'
Compared with the corresponding quarter last year, lower commodity prices
reduced EBIT by approximately $US185 million. However the contribution from
acquisitions and new operations, higher sales volumes and favourable foreign
currency impacts, substantially offset the declines in commodity prices.
Growth Portfolio
The BHP Billiton Group generated EBITDA of US$1,336 million for the September
quarter and committed US$565 million to capital projects and other investment
activities during the period. New and acquired operations raised EBIT by
US$125 million, compared with the corresponding quarter last year.
This EBIT improvement was due to increased interests in the Worsley alumina
refinery (Australia) and the Ekati(TM) diamond mine (Canada), increased profits
from the Mozal aluminium smelter (Mozambique), and the start-up of operations
at the Typhoon oil field (USA).
Mr Anderson said: 'Since the announcement of the merger in March this year,
BHP Billiton has invested about US$1.6 billion in capital and growth
activities.'
Committed growth projects include the ROD oil field and Ohanet wet gas field
(Algeria) and North West Shelf Train 4 (Australia); Mozal II (Mozambique)
aluminium expansion; base metals projects including Escondida Phase IV (Chile)
and Tintaya Oxide (Peru), and the Mount Arthur North energy coal development
(Australia).
Mr Anderson said: 'During the quarter, we announced two world class oil and
gas fields in the deepwater Gulf of Mexico (USA). Together, the two fields
have an estimated recoverable reserve of 225 to 460 million barrels of oil
equivalent (BHP Billiton share).'
Additionally, BHP Billiton's Antamina (Peru) copper-zinc mine achieved
commercial production ahead of schedule and on budget in October this year.
Financial Strength
The strength of BHP Billiton's financial performance is also reflected in the
Group's EBITDA/interest coverage ratio of 8.5 times, excluding the impact of
foreign exchange on foreign denominated debt. (The coverage ratio is 17 times
when these foreign exchange differentials are taken into account.)
The Group's capital structure was enhanced via the completion of a US$2.5
billion syndicated multicurrency revolving credit facility, the first
financing transaction since merger completion.
Significantly, Standard & Poor's upgraded its long-term debt rating for BHP
Billiton to 'A' Outlook Positive and Moody's also recently reaffirmed the
Group's long-term debt rating of 'A3' with a Positive Watch.
The credit rating upgrade from Standard & Poor's is an endorsement of one of
the elements of the strategic rationale for the merger and reflects the
stronger financial position and more diversified risk structure of the
combined Group.
Merger Integration
BHP Billiton Deputy CEO Brian Gilbertson said the integration was progressing
well, with the organisational framework now in place and the Group focused on
sequencing the extensive pipeline of growth opportunities, streamlining the
organisation and realising merger synergies.
'Reducing costs remains a prime area of focus for the management team,' he
said.
During the September quarter, BHP Billiton also announced the appointment of
Christopher Lynch to the position of Chief Financial Officer.
In October, BHP Billiton announced it had reached agreement for the sale of
its 80 per cent interest in the PT Arutmin Indonesia (Arutmin) energy coal
mining operations in Kalimantan, Indonesia to PT Bumi Resources Tbk for US$148
million. The sale includes an agreement whereby BHP Billiton will market 75
per cent of the mine's current coal production.
More recently, the Group announced it had completed its acquisition of Dia Met
Minerals Ltd (Dia Met) and the merger of its North American metals
distribution business with Alcoa Inc.
Steel Public Listing
The public listing of BHP Steel remains on-track for the end of the current
financial year. During the quarter, BHP Billiton announced that Graham Kraehe
had accepted the role of Chairman Elect and Ron McNeilly would become Deputy
Chairman Elect upon his retirement from BHP Billiton at the end of this
calendar year.
Outlook
During recent months, BHP Billiton's risk management team has undertaken a
detailed review of the potential impact that a range of global economic
scenarios could have on the Group's future operational and financial
performance.
Mr Gilbertson said: 'We are closely monitoring the global economic environment
and the impact of the slowdown on BHP Billiton's operational and financial
performance. Many commodity markets have deteriorated materially and several
traded commodities, including copper, nickel and aluminium are trading at near
record lows.
'If these conditions persist our earnings will not escape the impact. However,
the quality, size and diversity of the BHP Billiton portfolio provides us with
more options for responding to the slowdown than may be available to many of
our competitors.'
BHP Billiton previously announced it had idled about 30 per cent of its
ferrochrome capacity at Samancor (South Africa) and brought forward planned
maintenance at its Cerro Matoso (Colombia) and Yabulu (Australia) nickel
operations, due to the low price environment. Customer deliveries have been
supplemented by production stockpiles, and therefore have not been affected.
Dividend
The BHP Billiton Directors today announced an interim dividend of US$0.065 per
share would be paid to shareholders on 5 December 2001. The BHP Billiton
Limited dividend is fully franked.
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 paid in pounds sterling to shareholders on the UK register and rand to
shareholders on the South African stock exchange register.
The record date of the dividend will be 16 November 2001.
Share Exchange
The Board also announced that it had considered and elected not to pursue the
share exchange offer outlined at the time of the merger announcement.
If pursued, that offer would have enabled BHP Billiton Limited (Limited)
shareholders a one-time opportunity to exchange some, or their entire holding
of Limited shares for an equal number of BHP Billiton Plc shares, up to an
aggregate limit of 10 per cent of the then issued share capital of Limited.
As BHP Billiton Plc shares have consistently traded at a discount to Limited
shares since completion of the merger, there was no apparent economic
justification for such an election by Limited shareholders - who could achieve
more advantageous exchange terms by trading through the market. The Board
therefore determined that the costs of implementing the proposal could not be
justified and were not in the best interests of all shareholders.
Share Buy Back
BHP Billiton also announced today that the current program to buy back shares
in BHP Billiton Limited (Limited) through on-market purchases is being revised
to take into account any on-market purchases of BHP Billiton Plc shares (Plc)
by Nelson Investment Limited (Nelson).
Limited's buy-back program would now allow for the purchase of up to 186
million Limited shares, less the number of Plc shares purchased on-market by
Nelson. The level of share purchases undertaken will also remain subject to
prevailing market conditions and alternative capital investment opportunities
available to BHP Billiton.
Nelson is a company that may acquire and hold Plc shares under arrangements
with certain wholly owned subsidiaries of Plc. The effect of share purchases
by Nelson is similar to purchases by Plc of its own shares, but provides BHP
Billiton with greater flexibility in terms of capital management.
Any Plc shares purchased by Nelson will not be cancelled immediately and will
be available either to be placed in the market or repurchased by Plc and
cancelled in the future. Limited shares acquired under the program will be
purchased by Limited and subsequently cancelled.
During the September quarter, BHP Billiton repurchased approximately 4.1
million Limited shares at a weighted average price of A$8.83 per share in
accordance with the on-market buy back program announced in February 2001.
* * * *
Further news and information can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom
Dr. Robert Porter, Investor Relations Ariane Gentil, Manager
Tel: + 61 3 9609 3540 Communications
Mobile: +61 419 587 456 Tel: +44 20 7747 3977
email: Robert.Porter@bhpbilliton.com Mobile: + 44 7881 518 715
email: Ariane.Gentil@bhpbilliton.com
Mandy Frostick, Media Relations
Tel: +61 3 9609 4157
Mobile: +61 419 546 245
email: Mandy.J.Frostick@bhpbilliton.com
United States
South Africa Francis McAllister, Investor
Michael Campbell, Investor & Media Relations
Relations Tel: +1 713 961 8625
Tel: +27 11 376 3360 Mobile: +1 713 480 3699
Mobile: +27 82 458 2587 email:
email: Michael.J.Campbell@bhpbilliton.com Francis.R.McAllister@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number
3196209
Registered in Australia Registered in England and Wales
Registered Office: 600 Bourke Street Registered Office: 1-3 Strand London
Melbourne Victoria 3000 WC2N 5HA United Kingdom
Telephone +61 3 9609 3333 Facsimile +61 Telephone +44 20 7747 3800 Facsimile
3 9609 3015 +44 20 7747 3900
The BHP Billiton Group is headquartered in Australia
7 November 2001
BHP BILLITON RESULTS FOR THE QUARTER ENDED
30 SEPTEMBER 2001
PART 1 OF 2
Operating and Financial Review
Highlights
* A record attributable profit of US$608 million, for the quarter ended
30 September 2001, an increase of 3.2% compared with the corresponding period.
* EBIT of US$921 million was down 2.8% compared with the corresponding
period mainly reflecting a significant decline in commodity prices and prices
for steel products, partly offset by profits from new and acquired operations,
the favourable effect of exchange rates and higher volumes from existing
operations.
* Performance of the Customer Sector Groups resulted mainly in higher
EBIT contributions from Energy Coal (+US$89 million, +148%) and Carbon Steel
Materials (+US$81 million, +38%) and lower contributions from Base Metals
(-US$83 million, -62%), Steel (-US$78 million, -57%) and Stainless Steel
Materials (-US$42 million, -127%).
* An interim dividend of US$0.065 per share will be paid on 5 December
2001 to BHP Billiton Limited and BHP Billiton Plc shareholders of record on 16
November 2001. The dividend to be paid to shareholders of BHP Billiton
Limited is fully franked for Australian taxation purposes.
* Commercial production commenced at the Antamina copper-zinc project
(BHP Billiton interest 33.75%) in northern Peru on 1 October 2001, more than
four months ahead of the original schedule and under budget.
* Commencement of oil and gas production from the Typhoon oilfield (BHP
Billiton interest 50%) in the deepwater Gulf of Mexico. Typhoon was completed
on schedule and under budget.
* Drilling results in the Gulf of Mexico were encouraging with the
Atlantis-3 and Mad Dog-4 appraisal wells encountering hydrocarbons. Atlantis
(BHP Billiton interest 44%) is estimated to have reserves of 400 to 800
million barrels of oil equivalent (boe) gross. Atlantis is on a fast track
development pace and sanctioning of a project is anticipated during the first
half of calendar 2002. Mad Dog (BHP Billiton interest 23.9%) is estimated to
have reserves of 200 to 450 million boe gross. Project development sanction
by BHP Billiton and its partners is anticipated by the end of calendar year
2001.
* A US$2.5 billion syndicated multicurrency revolving facility was
successfully completed replacing three separate revolving facilities. The
facility is BHP Billiton's first financing transaction since the merger.
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 information in this release is prepared in accordance with UK
generally accepted accounting principles (GAAP). BHP Billiton Limited and BHP
Billiton Plc results for the period have been combined using the merger method
of accounting and the comparative period results have been prepared as if the
companies have always been combined. The reporting currency is US dollars
which is the functional currency of the BHP Billiton Group and the dominant
currency in which it operates.
The combined results for the quarter ended 30 September 2001 which are
prepared in accordance with UK GAAP are generally consistent with the combined
results under Australian GAAP as required by the Australian Securities &
Investments Commission in respect of Dual Listed Companies. The comparative
results are prepared on the same basis, however, under Australian GAAP there
is no comparative period as the merger was only effective from 29 June 2001.
With effect from 1 July 2001, the majority of BHP Billiton Limited's
businesses changed from Australian dollars to US dollars as the functional
currency of the combined BHP Billiton Group. This is consistent with BHP
Billiton Plc 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 combined results for the BHP Billiton
Group as presented in the BHP Billiton Plc 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 30 September 2001 compared with the quarter
ended 30 September 2000. All references to the corresponding period are to
the quarter ended 30 September 2000.
Quarter Result
Overview
The BHP Billiton Group financial results for the quarter ended 30 September
2001 reflect the underlying resilience of the combined group despite the
slowing in the global economy and the resulting impact on certain commodity
prices.
The following table provides key financial information for the BHP Billiton
Group for the quarter ended 30 September 2001 compared with the corresponding
period. Full details of Consolidated Financial Results are shown on page 18.
Quarter ended 30 September 2001 2000 Change
US$M US$M %
Group turnover(1) 4 361 4 578 -4.7
EBITDA(2) 1 336 1 353 -1.3
EBIT(3) 921 948 -2.8
Attributable profit 608 589 3.2
Basic earnings per share 10.1 10.2 -1.0
(US cents)
(1) Including the group's share of joint ventures' and
associates' turnover.
(2) EBITDA is profit before net interest, taxation, and
depreciation and amortisation.
(3) EBIT is profit before net interest and
taxation.
Turnover, including the group's share of joint ventures and associates,
decreased by 4.7% to US$4,361 million mainly reflecting the effect of lower
prices for base metals, petroleum products, aluminium and stainless steel
materials, and the spin-out of OneSteel Limited in October 2000. These
factors were partly offset by the higher prices for energy and metallurgical
coal, the acquisition of Rio Algom, equity interests in energy coal operations
in Colombia, and additional ownership interests in the Ekati(TM) diamond mine
(Canada) and the Worsley alumina refinery (Australia).
Profit attributable to BHP Billiton Group shareholders for the quarter ended
30 September 2001 was a record US$608 million, an increase of US$19 million or
3.2% compared with the corresponding period.
Basic earnings per share were US$0.101 compared to US$0.102 in the
corresponding period.
EBIT
The following table details the approximate impact of major factors affecting
EBIT for the quarter ended 30 September 2001 compared with the corresponding
period:
US$M
EBIT for the quarter ended September 948
2000
Change in sales prices ( 185 )
Change in volumes 50
Costs 15
Inflation ( 30 )
New and acquired operations 125
Ceased, sold and discontinuing ( 90 )
operations
Exchange rates 75
Asset sales -
Exploration ( 10 )
Other items 23
EBIT for the quarter ended September 921
2001
EBIT decreased by 2.8% compared with the corresponding period to US$921
million. This mainly reflects a significant decline in commodity prices and
lower profits from ceased, sold and discontinuing operations, partly offset by
profits from new and acquired operations, the favourable effect of exchange
rates and higher volumes from existing operations.
Lower prices for petroleum products, copper, nickel, aluminium, chrome and
silver decreased profit by approximately US$275 million compared with the
corresponding period. These decreases were partly offset by higher energy
coal and metallurgical coal prices which increased profit by approximately
US$110 million compared with the corresponding period.
Lower profits from Steel reduced profit by approximately US$55 million
compared with the corresponding period. Relative to the current period, the
corresponding period included approximately US$35 million from a higher
ownership interest in metallurgical coal operations in Queensland, operating
profits from discontinued steel operations (OneSteel Limited) and the Buffalo
oilfield (Australia). These interests were sold or spun-off to shareholders
since September 2000.
New and acquired operations increased profit by approximately US$125 million
compared with the corresponding period. This was mainly due to increased
ownership interests in the Worsley alumina refinery, lower operating losses at
Boodarie(TM) Iron (Australia), the commencement of operations at the Typhoon
oilfield (Gulf of Mexico), and increased profits from the Mozal aluminium
smelter (Mozambique).
Foreign currency fluctuations had a favourable effect of approximately US$75
million compared with the corresponding period mainly due to the impact of
lower Rand/US$ and A$/US$ exchange rates on related operating costs; partly
offset by losses on legacy A$/US$ currency hedging.
Higher sales volumes mainly from the Petroleum and Stainless Steel Materials
businesses, and iron ore operations in Western Australia increased profit by
approximately US$45 million compared with the corresponding period.
Net Interest
Net interest and similar items payable decreased by US$19 million to US$65
million, mainly due to exchange gains arising on the restatement of Rand
denominated debt and lower interest rates in the US and Australia, partly
offset by an increased level of average debt primarily resulting from
acquisitions made in the 2001 financial year. EBITDA interest coverage was
8.5 times compared to 9.0 times in the corresponding period (excluding the
effect of differences on exchange and discounting on provisions), and was 17.4
times compared to 14.7 times (excluding discounting on provisions).
Taxation
Tax expense of US$237 million was US$25 million lower than for the
corresponding period. The charge for the quarter represented an effective tax
rate of 27.7% (2000 - 30.3%). This is lower than the nominal tax rate of 30%
primarily due to exchange gains arising on the restatement of foreign currency
denominated debt and tax provision balances, and recognition of tax benefits
in respect of certain prior year overseas exploration expenditure and
operating losses. These factors were partly offset by non deductible
accounting depreciation and amortisation and non tax effected losses.
Dividend
Directors announced that a dividend of US$0.065 per share will be paid to BHP
Billiton Limited and BHP Billiton Plc shareholders on 5 December 2001. The
BHP Billiton Limited dividend is fully franked for Australian taxation
purposes.
Further details of the half yearly dividend are included on page 16.
Business Outlook
The global economic environment continues to deteriorate with a high degree of
uncertainty surrounding the outlook following the tragic events of 11
September 2001. Industrial production has fallen in our major markets
including the US, Japan, Asia and Europe. Businesses are running down
inventories and reducing spending on capital goods, particularly in the US, as
capacity utilisation rates fall to the lowest level in two decades. The
current weakness is in sharp contrast to the strong growth rates recorded in
the September 2000 quarter. China remains the one notable area of strong
demand growth as major infrastructure and construction activity persists.
However, this strength cannot fully compensate for weakness elsewhere and
commodity prices have steadily declined in 2001. LME traded commodities have
retraced to 1998 lows in US dollar terms. Although production cuts are now
intensifying, these remain insufficient to stem rising inventories in the
absence of an imminent strong recovery in demand. Looking ahead, the global
easing in interest rates and increased spending by governments should lay the
foundation of a resumption of stronger activity in due course, but for the
immediate future the risks remain on the downside.
Customer Sector Group Results
The following table provides a summary of the Customer Sector Group results
for the quarter ended 30 September 2001.
Quarter ended 30
September
(US$ Million) Turnover (1) EBIT (2)
2001 2000 Change 2001 2000 Change
% %
Aluminium 698 647 7.9 114 103 10.7
Base metals 359 468 - 23.3 51 134 - 61.9
Carbon steel 830 749 10.8 292 211 38.4
materials
Stainless steel 171 229 - 25.3 ( 9) 33 -127.3
materials
Energy coal 538 439 22.6 149 60 148.3
Exploration, 79 66 19.7 23 16 43.8
technology and new
business
Other activities 344 134 156.7 41 40 2.5
Petroleum 787 850 - 7.4 325 344 -5.5
Steel 780 1 215 - 35.8 60 138 -56.5
Group and ( 83) ( 73) - 13.7 ( 125) ( 131) 4.6
unallocated
BHP Billiton Group 4 361 4 578 - 4.7 921 948 - 2.8
(1) Turnover does not add to the BHP Billiton Group figure due
to inter-segment transactions.
(2) EBIT is profit before net interest
and taxation.
A detailed explanation of the factors influencing the performance of the
Customer Sector Groups is included below on pages 7 to 16. All references to
production volumes are BHP Billiton's share of production unless otherwise
indicated.
Aluminium
(US$ 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Million)
Turnover 698 647 7.9 Alumina 964 539 78.8
production
EBIT 114 103 10.7 Aluminium 244 233 4.7
production
LME aluminium 1,380 1,565 -11.8
price
(cash, US$/t, ave)
Aluminium contributed EBIT of US$114 million, an increase of US$11 million or
10.7% compared with the corresponding period.
Major factors which affected the comparison of results were:
* higher profits from Worsley following the acquisition of an
additional 56% interest in January 2001;
* increased profits from the fully commissioned Mozal aluminium
smelter;
* higher volumes from Worsley due to completion of the expansion in
July 2001;
* lower LME price linked production costs; and
* favourable effect of US dollar exchange rate movements against Rand
(South Africa), Real (Brazil) and Guilder (Suriname) related operating costs.
These were partially offset by:
* an 8% decrease in the average realised aluminium prices;
* lower volumes at Alumar and Valesul (Brazil) due to power
curtailments; and
* increased pot relining rate at Hillside (South Africa).
Aluminium smelters produced 244,000 tonnes of metal, an increase of 5%
compared with the corresponding period mainly due to Mozal which contributed
32,000 tonnes compared with 7,000 tonnes for the corresponding period.
Alumina production increased by 425,000 tonnes to 964,000 tonnes, an increase
of 79% compared with the corresponding period mainly reflecting the additional
56% interest in Worsley which contributed 431,000 tonnes.
Base Metals
(US$ 2001 2000 Change% 2001 2000 Change%
Million)
Turnover 359 468 -23.3 Copper production 202 212 -4.7
EBIT 51 134 -61.9 ('000 tonnes)
Silver production 8,183 8075 1.3
('000 oz)
LME copper price 0.67 0.85 -21.2
(cash, US$/lb, ave)
Base Metals contributed EBIT of US$51 million, a decrease of US$83 million or
61.9% compared with the corresponding period. From 1 July 2001, no profits
have been recognised for the Ok Tedi copper mine (PNG).
The major factors which affected the comparison of results were:
* a significant decline in the average realised copper price to
US$0.66/lb compared to US$0.88/lb in the corresponding period; and
* lower silver and zinc prices.
These were partially offset by:
* inclusion of profits from the various Rio Algom operations (Cerro
Colorado, Alumbrera and Highland Valley) which were acquired in October 2000;
and
* lower LME price linked treatment and refining costs.
Exploration expenditure for the quarter was US$5 million (2000 - US$3
million); of which, exploration charged to profit was US$4 million (2000 -
US$2 million).
Production of payable copper decreased by 5% compared with the corresponding
period mainly reflecting production from Ok Tedi which has been excluded from
1 July 2001, and lower concentrate production at Escondida due to lower tonnes
milled and lower recoveries, partly offset by the inclusion of production from
the various Rio Algom operations.
Production of lead, zinc and silver was consistent with the corresponding
period.
Subsequent to quarter end, BHP Billiton announced that commercial production
had been achieved at the Antamina mine in Peru (BHP Billiton interest 33.75%)
approximately four months ahead of schedule and slightly under budget.
Antamina will be among the largest and lowest cost copper-zinc producers in
the world with average total annual production at approximately 305,000 tonnes
of copper and 285,000 tonnes of zinc in the first ten years, with a mine life
in excess of 22 years.
The Escondida Phase IV (Chile) expansion project is progressing as anticipated
and will increase copper production capacity to 1 million tonnes per annum
(100% terms) beginning in 2003.
Carbon Steel Materials
(US$ 2001 2000 Change% (Million tonnes) 2001 2000 Change%
Million)
Turnover 830 749 10.8 Iron ore production 17.1 17.3 -1.2
EBIT 292 211 38.4 Metallurgical coal 8.4 8.0 5.0
production
Manganese alloy 0.119 0.175 -32.0
production
Manganese ore 0.972 1.024 -5.1
production
Carbon Steel Materials contributed EBIT of US$292 million, an increase of
US$81 million or 38.4% compared with the corresponding period.
Major factors which affected the comparison of results were:
* favourable effect of lower A$/US$ and Rand/US$ exchange rates on
related operating costs;
* higher metallurgical coal prices and volumes;
* improved operating performance and lower capital expenditure written
off at Boodarie(TM) Iron (Australia);
* higher iron ore volumes.
These were partially offset by:
* higher costs at metallurgical coal operations in Queensland mainly due
to higher royalty costs, increased stripping and dragline costs at Blackwater,
a mine roof failure at Crinum, and dragline performance at Peak Downs; and
* increased costs at manganese alloy operations due to furnace
efficiency problems at Tasmanian Electro Metallurgical Company (Australia) and
Metalloys (South Africa).
Exploration expenditure for the quarter was US$nil (2000 - US$1 million).
Exploration charged to profit was US$nil (2000 - US$1 million).
West Australian iron ore operations sold 16.1 million wet tonnes, an increase
of 7% compared with the corresponding period mainly due to increased demand
for fines in China and Japan. Samarco (Brazil) iron ore production was 1.2
million which was 33% lower than the corresponding period mainly due to lower
market demand in the US for pellets.
Queensland coal shipments were 6.3 million tonnes (including 100% interest in
BHP Mitsui Coal), consistent with the corresponding period. Illawarra coal
despatches were 1.6 million tonnes, an increase of 10% compared with the
corresponding period mainly due to timing of shipments and a new market.
Manganese alloy production was 119,000 tonnes, a decrease of 32% compared to
the corresponding period mainly due to furnace shutdowns, relining and
efficiency problems. Manganese ore production was 972,000 tonnes, a decrease
of 5% compared with the corresponding period. Despite the reduction in
production volumes, despatches were consistent with the corresponding period.
Boodarie(TM) Iron shipments were 358,000 tonnes, an increase of 304,000 tonnes
compared with the corresponding period mainly reflecting continued production
ramp-up at the West Australian plant.
Stainless Steel Materials
(US$ 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Million)
Turnover 171 229 -25.3 Nickel production 15.9 12.8 24.2
EBIT -9 33 -127.3 Ferrochrome 207 273 -24.2
production
LME nickel price 2.49 3.72 -33.1
(cash, US$/lb,
ave)
Stainless Steel Materials EBIT was a loss of US$9 million, a decrease of US$42
million compared with the corresponding period.
Major factors which affected the comparison of results were:
* lower nickel and chrome prices; and
* higher costs at chrome operations in South Africa mainly due to the
expiry of price linked electricity contracts which are currently in the
process of being renegotiated.
These were partially offset by:
* higher nickel volumes; and
* favourable effect of lower Rand/US$ exchange rate on related operating
costs.
Exploration expenditure for the quarter was US$1 million (2000 - US$4
million). Exploration charged to profit was US$nil (2000 - US$1 million).
Nickel production was 15,900 tonnes, an increase of 24% compared with the
corresponding period mainly reflecting production from Cerro Matoso Line 2
(Colombia) which commenced production on 1 January 2001.
Ferrochrome production was 207,000 tonnes, a decrease of 24% compared with the
corresponding period, and chrome ore production was 629,000 tonnes, a decrease
of 32% compared with the corresponding period. These decreases were due to
production cut backs which were initiated in response to weakness in the
ferrochrome market.
Energy Coal
(US$ 2001 2000 Change% (Million tonnes) 2001 2000 Change%
Million)
Turnover 538 439 22.6 Energy coal 22.4 20.8 7.7
production
EBIT 149 60 148.3
Energy Coal contributed EBIT of US$149 million, an increase of US$89 million
or 148.3% compared with the corresponding period.
Major factors which affected the comparison of results were:
* a significant increase in export market prices for both long term
contracts and spot markets;
* favourable effect of lower Rand/US$ exchange rates on related operating
costs; and
* inclusion of profits from the Carbones del Cerrejon and Cerrejon Zona
Norte operations (Colombia), in which equity interests were acquired in
September 2000 and November 2000 respectively.
These were partially offset by:
* higher costs mainly due to the effect of inflation in South Africa; and
* lower Hunter Valley (Australia) volumes mainly due to timing of export
shipments.
Exploration expenditure for the quarter was US$1 million (2000 - US$3
million). Exploration charged to profit was US$nil (2000 - US$1 million).
Energy coal production was 22.4 million tonnes, an increase of 8% compared
with the corresponding period:
- South African production was 14.5 million tonnes, consistent with the
corresponding period;
- US production was 3.1 million tonnes, consistent with the corresponding
period;
- Indonesian and Australian production was 3.6 million tonnes, an increase
of 12% compared with the corresponding period mainly due an increase in
crushing plant and transport capacity in Indonesia and productivity gains at
Bayswater (Australia); and
- Colombian operations contributed saleable production of 1.1 million
tonnes.
Major projects currently being undertaken, including the Boschmanskrans
project (South Africa), the Mount Arthur North project (Australia) and the San
Juan Underground project (US) are progressing as anticipated.
Exploration, Technology and New Business
(US$ 2001 2000 Change% ('000 carats) 2001 2000 Change%
Million)
Turnover 79 66 19.7 Ekati(TM) diamonds 767 309 148.2
production
EBIT 23 16 43.8
Exploration, Technology and New Business contributed EBIT of US$23 million, an
increase of US$7 million or 43.8% compared with the corresponding period.
Major factors which affected the comparison of results were:
* higher profits from Ekati(TM) following the acquisition of an additional
29% interest in June 2001;
These were partially offset by:
* lower Ekati(TM) sales volumes reflecting two months of core sales in the
current quarter compared to three months of core sales in the corresponding
period.
Total worldwide minerals exploration charged to profit was US$11 million, a
decrease of US$1 million compared with the corresponding period.
Ekati(TM) diamond production was 767,000 carats, an increase of 458,000 carats,
or 148% compared to the corresponding period, mainly reflecting the
acquisition of an additional 29% interest, higher carat grade on core
production and higher recoveries of lower quality diamonds.
Other Activities
Other Activities contributed EBIT of US$41 million, consistent with the
corresponding period.
Major factors which affected the comparison of results were:
* inclusion of profits from North American Metals Distribution (US) which
was acquired as part of Rio Algom in October 2000; and
* operating losses in the corresponding period from HBI Venezuela.
These were partially offset by:
* increased losses from Columbus Stainless Steel (South Africa) mainly due
to lower stainless steel prices; and
* lower Richards Bay Minerals (South Africa) sales volumes.
Richards Bay Minerals titanium slag sales were 22% lower than the
corresponding period, mainly due to the timing of shipments and a slowdown in
the market.
During the quarter, BHP Billiton and Alcoa Inc. announced agreement had been
reached regarding the merger of the BHP Billiton Group's North American Metals
Distribution business with Alcoa's North American metals distribution
business, Reynolds Aluminium Supply Company. BHP Billiton and Alcoa will each
own 50% of the company that will be independently managed.
Petroleum
(US$ 2001 2000 Change% Production: 2001 2000 Change%
Million)
Turnover 787 850 -7.4 Crude oil and 19.5 20.8 -6.3
condensate
EBIT 325 344 -5.5 (Millions bbls)
Natural gas (bcf) 55.5 46.6 19.2
Average realised oil 24.86 29.01 -14.3
price
(US$/barrel)
Petroleum contributed EBIT of US$325 million, a decrease of US$19 million or
5.5% compared with the corresponding period.
Major factors which affected the comparison of results were:
* lower average realised oil price net of commodity hedging of
US$24.86 per barrel compared to US$29.01 per barrel in the corresponding
period. No commodity hedging was undertaken in the current quarter compared
to an average realised oil price before commodity hedging of US$31.58 per
barrel in the corresponding period;
* lower liquefied natural gas (LNG) and liquefied petroleum gas (LPG)
prices; and
* the unfavourable effect of the lower A$/US$ exchange rate on
restatement of monetary items.
These were partly offset by:
* lower price linked costs, mainly resource rent tax and royalties;
* inclusion of profits from the Typhoon oilfield and the Zamzama field
(Pakistan) which commenced operations in July 2001 and March 2001
respectively; and
* higher volumes at Liverpool Bay (UK), Bass Strait (Australia) and
the North West Shelf (NWS) in Australia.
Exploration expenditure for the quarter was US$74 million (2000 - US$46
million). Exploration charged to profit was US$34 million (2000 - US$26
million).
Oil and condensate production was 6% lower than the corresponding period due
to lower production at Bass Strait, Griffin and the Laminaria/Corallina
oilfields (Australia), and the sale of the Buffalo oil field. This was
partially offset by higher production at Liverpool Bay (UK) mainly due to a
planned maintenance shutdown in September 2000, the commencement of operations
at Typhoon, and the acquisition of the 4.95% interest in the Genesis oilfield
(Gulf of Mexico).
Natural gas production was 19% higher than the corresponding period mainly due
to higher volumes recorded at Liverpool Bay, Zamzama and Bass Strait.
LNG production at the NWS was 4% higher than the corresponding period mainly
due to longer than planned maintenance shut-downs in the corresponding period.
Steel
(US$ Million) 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Turnover 780 1,215 -35.8 Raw steel 1,382 1,455 -5.0
EBIT 60 138 -56.5 Marketable 1,377 1,425 -3.4
steel products
(inc T&L; OneSteel (core steel
in Sept 2000 qtr) business only)
Steel contributed EBIT of US$60 million, a decrease of US$78 million or 56.5%
compared with the corresponding period.
Major factors which affected the comparison of results were:
* lower international prices;
* exclusion of operating profits from discontinued businesses (primarily
OneSteel Limited) which were included in the corresponding period; and
* higher costs mainly due to repairs and maintenance and lower
throughput at Port Kembla steelworks (Australia) together with higher
electricity costs at New Zealand Steel.
These were partly offset by:
* profit of US$16 million on the sale of Australian and US strapping
businesses.
Steel despatches from flat and coated operations were 1.3 million tonnes for
the quarter, 5% above the corresponding period:
- Australian domestic despatches were 691,000 tonnes, 42% above the
corresponding period, mainly due to the inclusion of despatches to OneSteel
Limited (previously treated as despatches within the BHP Billiton Group).
- Australian export despatches were 387,000 tonnes, down 28%.
- New Zealand steel despatches were 144,000 tonnes, up 7%.
Group and Unallocated Items
EBIT for Group and Unallocated Items was a loss of US$125 million for the
quarter ended 30 September 2001 compared with a loss of US$131 million in the
corresponding period.
The result included losses of approximately US$93 million from legacy A$/US$
currency hedging compared with losses of approximately US$70 million in the
corresponding period. These losses mainly reflect the lower value of hedge
settlement rates compared with hedge contract rates for currency hedging
contracts settled during the quarter.
Capital Management
During the first quarter, BHP Billiton Limited commenced the on-market
re-purchase of shares in accordance with the previously announced share
buyback programme resulting in the re-purchase of 4,134,622 shares at a
weighted average price of A$8.83 per share.
During September 2001, BHP Billiton announced the successful completion of a
US$2.5 billion syndicated multicurrency revolving facility. The facility is
the first financing transaction post merger and is the Group's cornerstone
credit facility replacing the US$1.2 billion credit facility of BHP Billiton
Limited and the US$1.5 billion and US$1.25 billion credit facilities of BHP
Billiton Plc. The new facility is available in various currencies and
jurisdictions, and reflects BHP Billiton's global diversity. The facility
includes a US$1.25 billion 364-day revolving credit component and a US$1.25
billion five-year revolving credit component.
Dividends
Directors announced a half yearly dividend of US$0.065 per fully paid ordinary
share will be paid on 5 December 2001 by BHP Billiton Limited and BHP Billiton
Plc. The BHP Billiton Limited dividend is fully franked for Australian
taxation purposes.
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 Africian rand to shareholders on the South Africian section
of the register. The rates of exchange applicable two business days before
the declaration date are used for conversion.
The record date for payment of the dividend for both BHP Billiton Limited and
BHP Billiton Plc will be 16 November 2001. American Depositary Shares (ADSs)
each represent two fully paid ordinary shares and receive dividends
accordingly. The record date for ADSs is 15 November 2001.
Transfer documents will be accepted for registration at each Company's share
registers (and in the case of the ADSs the US Depositary) at the following
addresses:
BHP Billiton Limited BHP Billiton Plc
Australia United Kingdom
5th Floor Lloyds TSB Registrars
BHP Petroleum Plaza The Causeway
120 Collins Street Worthing
Melbourne Victoria 3000 West Sussex BN99 6DA UK
United Kingdom South Africa
Computershare Services plc Mercantile Registrars Limited
The Pavilions 8th Floor
Bridgwater Road 11 Diagonal Street
Bedminster Down Johannesburg 2000
Bristol BS13 8AR
United States
Morgan Guaranty Trust Company of New York
Shareholder Services
MS 45 - 02 - 54
150 Royall Street
Canton MA 02021
This report is made in accordance with a resolution of the Board of Directors.
Karen J Wood
Company Secretary
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