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REPORTING SEASON: BHP Billiton (BHP)

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Figure 1: BHP Billiton 12 month chart

 

Mining giant BHP Billiton Limited (BHP) reported its first half 2014 results today.

BHP’s underlying profit increased 31% to US$7.76 billion, helped by record production from iron ore and lower tax payments.

This result continued to show how BHP is sticking to its long-term strategy of owning and operating large, long life, low cost mines.

BHP believes the company is on a strong path to achieve an average rate of return of greater than 20% for its major projects.

BHP’s profit rose by 83% to US$8.1 billion. Its iron ore division profit was US$6.5 billion, the profit from its copper unit was slightly higher at US$3.44 billion but its petroleum unit profit fell 16% to US$2.51 billion.

BHP reiterated that it is committed to deliver more tonnes and more barrels from existing assets at a lower unit cost.

BHP’s costs continued to decline thanks to lower tax and continued cuts in capital expenditure (CAPEX). BHP is on track to meet its target of a 25% cut in FY14 CAPEX.

Tighter capital management sees significant growth in free cash flow by US$7.8 billion in the period.

Cash at end December $10,909 million, up from $5,667 million at end June 2013.

BHP increased its interim dividend to US$0.59 a share, slightly less than the market had expected.

 

You can see all of CommSec’s reporting season analysis by clicking here.

Juliana Roadley, Market Analyst,