BHP Billiton Retail Shareholder Event 18 Sept 2018

BHP Chairman Ken MacKenzie presented to 60+ retail shareholders in a highly successful event organised by BHP, UKSA and ShareSoc.

After a 20 minute presentation, Ken answered questions for an hour, covering the BHP outlook, the importance of China, China money supply implications, the rationale for selling non-conventional petroleum assets, the focus on good businesses with lots of low cost producers, the demand for coal in China as they build lots of nuclear plants, Samarco costs, the dangers of doing buy-backs at a high price in the commodity cycle, Australian franking credit which avoids double taxation, continuing the dual listing (they see no business case to change although Elliot would like them to and it would cost one billion to move – Unilever please note!), controlling capex (capex is for volume replacement not growth in capacity), will you do major acquisitions (no plans), why is there such emphasis on EBITDA rather than cash (Ken agreed that D and A are very important and BHP is paying more attention to ROCE).

One lady managed to ask 6 questions on the accounts in one go (admirably quickly and precisely!) and Ken elegantly answered all of them. It was most impressive.

Ken has been Chairman for 1 year and 17 days (@18/9/18). A Canadian, he has lived in Australia for over 15 years and now lives in the UK half of the year. His presentation focused on safety (number 1), portfolio, capital discipline, capability and social licence. These are the areas he intends to focus on. He talks like a CEO, but in chatting over tea he says he only does two days a week on the Chairman role. I was very impressed with his level of detail.

Shareholders can expect good dividends, possibly buy-backs and good capital discipline. The lessons of wasting money on the 2011 acquisition of non-conventional assets appear to have been learned. He says he is not planning large acquisitions and I believed him.

BHP have been running retail shareholder events with UKSA for over 10 years. They also run similar retail investor events in Australia. This sort of long term commitment and hard work results in building trust between shareholders and the company. Being prepared to allocate time for these events provides an insight into the corporate governance of the company and provides reassurance that one’s investment will be well looked after. BHP are a role model for other UK companies to follow.

After the Q&A, tea was served with finger sandwiches and miniature cakes with strawberries and cream. Ken and other BHP executives mingled with the audience and answered further questions.

Nick Steiner of UKSA was the lead organiser for this event. ShareSoc hope to be able to do more of these joint UKSA-ShareSoc large company events. We think this be of interest to many members and will complement the ShareSoc growth company investor events which tend to focus on smaller companies.

 

Cliff Weight, Director, ShareSoc