REPORTING SEASON: BHP Billiton Ltd (BHP)
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Figure 1: BHP Billiton Ltd 12 month chart
BHP Billiton (BHP) a little weaker than expected, no buyback split in play.
· The headline numbers from mining giant BHP Billiton’s (BHP) FY14 result were a little weaker than expected. Sales came in below expectations only increasing by 1.9%. BHP delivered a smaller than expected dividend for the half and disappointed the shareholders that were looking for a share buyback (some expected a US$3Billion buyback) from the group.
· BHP sales were hit by weaker prices for some commodities over the period which was no surprise to the market as falling metallurgical demand continued to slide. BHP’s capital & exploration spending fell by 31.9% as expected with the brown bagging (shelving) of projects and prior announced cuts to programs.
· BHP also released the details of its newly announced US $16Billion de-merger plan to spin off many of the assets purchased from the Billiton merger back in 2001. This plan will allow BHP to refocus on its key goals of owning, and working, large quality assets. BHP will hold its current iron ore, copper, coal, petroleum and potash assets, which alone account for over 95% of BHP’s revenue in the last year. The newly formed second company, called NewCo at present, will hold its aluminium, manganese, nickel some of its smaller coal projects in South Africa along with smaller coal, silver and other miner base metal assets in Australia. BHP plans to sell off its Nickel West business separately. NewCo will have a primary listing in Australia on the ASX and a secondary listing in South Africa on Johannesburg’s JSE exchange. The new company is expected to be listed by mid-2015.
· BHP will pay a 2H dividend of US$0.62 a share on the 23rd of September 2014