BHP Triples Dividend As Earnings Rebound

Andrew Cummings
August 22, 2017

"We have determined that our onshore USA assets are non-core and we are actively pursuing options to exit these assets for value", BHP said in a statement.

Underlying profit was $US6.73 billion and analysts had been forecasting around $US7 billion.

But even those stellar numbers were below analysts' forecasts, as was the company's full year dividend of US$0.83 cents per share, equivalent to a 66% payout ratio after its final payout was tripled to $0.43c.

The biggest institutional shareholders in BHP Billiton plc include Morgan Stanley & Co Inc which owns 5 million shares in the company valued at $154.24 million. Previous year the company recorded a statutory loss of $US6.38 billion (largely because of two significant exceptional items) and slashed its dividend.


The result was driven by the company's Pilbara iron ore operations which delivered revenue of $US14.6 billion, compared with $US10.5 billion last financial year on higher prices for the commodity. The company also said it had enjoyed a strong operating performance and improved capital productivity.

An exit from shale "is likely to appease domestic investors, although at this point the financial outcome remains uncertain", Melbourne-based RBC Capital Markets analyst Paul Hissey said in a note. The miner's earnings before interest, tax, depreciation and amortisation meanwhile are expected to come in at about $20 billion (£15.5 billion), up from $12 billion (£9.3 billion) a year ago.

But what was also key was that BHP chose to pay down net debt, which was reduced by almost $10 billion in a move that will strengthen the balance sheet.

Crude oil has surged by 80 per cent since hitting a 12-year low of about US$26 in February 2016 as major producers agreed to cut production.


CEO Andrew Mckenzie said the company would maintain this solid momentum into 2018 thanks an expected 7% rise in volumes and further productivity gains.

Elliott wants BHP to sell out of U.S. shale, and has also called for an in-depth, independent review of BHP's petroleum business.

Iron ore prices peaked at almost $US95 a tonne in February this year and have remained volatile since but now trade around $US75 a tonne. BidaskClub upgraded shares of BHP Billiton Limited from a "buy" rating to a "strong-buy" rating in a research note on Wednesday, July 19th.

A number of other large investors also recently added to or reduced their stakes in the stock. The company presently has a consensus rating of "Hold" and an average target price of $34.24. Five analysts have rated the stock with a sell rating, eleven have given a hold rating and six have given a buy rating to the company's stock.


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