Bhp Billiton interims

A diversified natural resources company and among the world’s largest producers of major commodities, including aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and has substantial interests in oil and gas.  I have a holding in my income portfolio (epic code: BLT).

Bhp Billiton announced results for the six months to 31 December 2013 today.  Revenue increased by 5.9% to $33,948m, with Iron Ore being the major contributor to this increase with a $1,718m uplift in revenues, representing a 20.5% increase.

Underlying operating profits were up 4.9% to $12,382m, with once again Iron Ore being the major contributor showing a $1,707m uplift.  The charts below show the split of revenue and profits by resources:

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Production volumes were up in most areas with Metallurical Coal and Iron Ore showing the largest increases.  The chart below shows the production increases for the half-year compared to half-year 2012:

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Management stated that Iron Ore and Metallurgical Coal are well positioned to achieve full year production guidance, although the current wet season in northern Australia represents a key risk. Full year guidance is also retained for their remaining pillars of Petroleum and Copper.  Management expect this momentum to be maintained, with production growth of 16 per cent anticipated over the two years to the end of the 2015 financial year.


Underlying diluted EPS was up 30.6% at $1.454, with statutory diluted EPS up 83.0% at $1.51. The interim dividend of 59c was increased by 3.5%, although this follows the recent precedent of the interim replicating the previous year's final. 

Operating cash flow was very strong, increasing by 65% to $11,859m and with capital and exploration expenditure reduced by $3,155m to $8,832m, free cash flow (FCF) was converted from a negative -$4,814m last year to $3,027m.  Management are projecting continuing strong FCF for the second half and expect the net debt of $27,088m to approach $25bn by 30 June 2014.  They also confirmed that capital and exploration expenditure is expected to decline by 25% this year to $16.1bn and decline again next year.


Management are delivering on their promise of introducing strict financial disciplines in their management of FCF, providing the company with the ability to be able to focus on improving shareholder returns.  BLT remains a key component of my equity income portfolio, currently representing about 8%.