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 updated the market yesterday on first quarter production. They stated that Group production increased by 9% during the period and production guidance remains unchanged and are on track to deliver Group production growth of 16% over the two years to the end of the 2015 financial year.
By major resources:
Total petroleum production increased by 7% in the quarter to 67.4 MMboe and guidance for the year remains unchanged at 255 MMboe a 5% increase.
Total copper production (excluding operations sold last year) decreased by -1% in the quarter to 389 kt and guidance for the year remains unchanged at 1.8 Mt an increase of 5%. The reduction in production was due to a 12% decline in ore grades, two days of industrial action and a power outage throughout Northern Chile.
Iron ore production increased by 17% in the September 2014 quarter to a record 57 Mt. and is forecast to increase by 11 per cent in the year to 225 Mt in line with their prior guidance.
Metallurgical coal production increased by 25 per cent in the September 2014 quarter to a record 13 Mt. Total metallurgical coal production is forecast to increase by 4% in the 2015 financial year to 47 Mt, consistent with their prior guidance.
For the other resources, that will form a planned demerged company sometime in the early part of 2015, had the following changes to production: energy coal -9%; alumina -1%; aluminium -16%; manganese ores +10%; manganese alloys +25% and Nickel -12%.
This is a solid performance from BLT, but production performance is not driving the SP, it's commodity prices, with downward pressure across all their major resources. It is likely that increased production and reduced costs through improved efficiency will partially offset the commodity price reductions. This in addition to the planned reduction in capital expenditure will drive higher free cash flow - financing an improved pay-out to shareholders.
No comments:
Post a Comment