BHP Full Year Result: Profit back in the black as BHP tables its shale sale

CommSec

 The world’s largest mining company, BHP Billiton’s (BHP) full year numbers were a vast improvement on this time last year as the rebuilding phase nears completion. That being said, BHP’s underlying profit was below market expectations even with a massive 454% lift on last year.

 BHP told the market it will either; demerge and relist, or if an appropriate buyer is found - look to directly sell off its US on-shore energy assets (shale assets), which was also expected by the market. BHP said it is in no particular rush to complete the deal.

 Segment performance by assets showed that iron ore now accounts for 44% of group earnings with iron-ore production increasing by 4% to 231 million metric tonnes over the year. BHP reached record volumes from its mines in Western Australia’s Pilbara region, with planned expansion between 3% and 5% this year. Coal earnings lifted by nearly 500%, Copper added 35% while Petroleum increased by another 11%. Over the year its Queensland coal unit was hit by higher costs as volumes were hit by the one off impact of Cyclone Debbie. BHP recently said that all its major projects under development are tracking well and BHP has had recent progress with its petroleum exploration programs especially at its Wilding-2 appraisal well in the Gulf of Mexico.

 Productivity improved by US$1.3 billion over the year and net operating cash flow increased by 58% to US$16.804 billion. This was thanks to higher commodity prices and operational improvements. Capital expenditure and exploration expenditure was reduced by 32% to US$5.2 billion in line with expectations. BHP expects to see this expense line increase to US$6.9 billion in FY18. BHP is still working on environmental and social remediation programs in Brazil following the Samarco dam failure, with over 82,000 claims being resolved. BHP reported a loss of US$381 million (after tax) in relation to the Samarco dam failure.

 BHP announced a new global multi-currency bond repurchase plans. BHP announced a second half dividend of US$0.43, slightly below expectations to be paid on 7 September 2017.

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