Andrew Mackenzie ‘transformed’ BHP: Ken MacKenzie
Chairman Ken MacKenzie has paid tribute to Andrew Mackenzie for transforming BHP into a simpler, more productive company.
To look at Andrew Mackenzie’s 6½ years atop BHP using the standard financial metrics it has been an uneventful, even underwhelming tenure.
The shares are up by just 12.3 per cent since May 2013, when Mackenzie started as chief executive, while revenue, profit, earnings per share and market capitalisation are all down over that period.
Yet those numbers belie one of the more dramatic periods in BHP’s history and a tenure as eventful as any of his predecessors, including high-stakes dealmaking, an environmental disaster at the Samarco mine in Brazil and record shareholder returns in his final year in charge.
Chairman Ken MacKenzie paid tribute to him for transforming BHP into “a simpler and more productive company — financially strong and sharply focused on value for its shareholders”.
Marius Kloppers, in one of his first acts as chief executive, hired Mackenzie from Rio Tinto to run its non-ferrous metals business.
And when Mackenzie succeeded the go-go Kloppers, he became a steadying hand, there to unpick some of his predecessor’s legacy and strip BHP back to its four pillars of iron ore, copper, metallurgical coal and oil and gas.
In 2015, he spun out South32 in an $11bn listing of many of the businesses he had previously run as a group executive. Much of the collection of silver, lead, metallurgical and thermal coal, aluminium, nickel and manganese assets had come to BHP via its earlier merger with Billiton, where Kloppers had risen through the ranks.
And in one of his final big deals, Mackenzie sold the Petrohawk Energy shale assets — the one big acquisition Kloppers pulled off in a string of thwarted bids, including two runs at Rio and one at Potash Corp of Saskatchewan.
That last deal might be said to have been done under duress, with hedge fund Elliott Management waging a public campaign for asset sales and an end to the dual-listing structure — another legacy of the Billiton deal — that sees BHP’s London-listed shares trade at a sustained discount to the ASX scrip.
BHP was estimated to have spent $US40bn on Petrohawk since 2011, and dusted half of that sum — after including cash flows — by June last year when it was sold to BP for $US10.8bn.
Those two deals alone account for most of the $34bn fall in the market value of BHP over Mackenzie’s time. But the $10.4bn in special dividends and buybacks funded by the Petrohawk sale mean Mackenzie leaves boasting of record shareholder returns. Margins ran at 50 per cent in the latest result, and the return on capital at 18 per cent, a testament to strong resource prices and cost-cutting by management.
His chairman makes a possibly bolder claim for Mackenzie’s tenure: that his hard work “has changed the way we operate and quite frankly the way that we engage with the world”.
An accomplished scientist before he joined the mining industry and a trustee of the progressive UK think-tank Demos before coming to BHP, Mackenzie pushed the Big Australian to make big statements on how it approached climate change, gender diversity and indigenous issues.
In his farewell remarks to journalists on Thursday, Mackenzie added emphasis when he outlined the company’s championing of various causes including “serious action on climate change”.
BHP has long supported putting a price on carbon, and worked to reduce its own pollution. But last month Mackenzie outlined plans for the company to spend $400m to reduce so-called scope-three emissions that result from the way BHP’s customers price and use its products.
He was a prominent player in the business agenda for the G20 summit held in Brisbane in 2014 and has overseen big changes in the way BHP deals with industry bodies, particularly when they conflict with the company’s views on climate change.
Business Council of Australia chief executive Jennifer Westacott said Mackenzie had transformed BHP and ensured it remained a world leader in the highly competitive global resources sector. “Andrew has been an active and thoughtful member of the Business Council and he has also been an outstanding corporate leader who has made a significant contribution to the nation,” she said.
He appears to have been able to choose the timing of his departure, announcing the succession a month before his 63rd birthday.
“It is not an easy decision to choose to retire from what is a great job,” Mackenzie said. “But it feels right. I do believe the company I lead is in a great position.”
He will be wishing his successor Mike Henry every success. After all, there are 77,491 BHP shares awarded as deferred short-term incentives and as many as 1.02 million long-term incentive shares worth $40.3m to come his way. Up until August 2024, it depends on how well Henry does with the legacy Mackenzie has left him.
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