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BHP Billiton Limited (BHP)

  • Feb. 18, 2014, 3:25 AM
    • BHP Billiton's (BHP) underlying FH1 profit jumped 31% to $7.76B and exceeded consensus of $6.9B, helped by a rise in its earnings from its iron ore operations, cost cuts and the improving global economy.
    • Revenue increased 5.9% to $33.9B.
    • Annualized cost cuts $4.9B, projects $5.5B by end of FY.
    • Expects global economy to continue growing.
    • Iron ore underlying EBIT jumped 60% to $6.5B; copper slipped $200M to $2.9B; coal $510M vs $79M prior; petroleum -16% to $2.5B.
    • BHP declared a dividend of $0.59 for the period, up from $0.59 from the previous corresponding period. The record date is March 7 and the payment date is March 26.
    • The mining giant said its strong cash flows could enable it to consider a substantial dividend increase and shareholder return in the future. The company also plans to reduce net debt to $25B by June 2014 from $27.1B.
    • Shares +0.4% in London. (PR)
    | 1 Comment
  • Feb. 7, 2014, 9:45 AM
    • BHP Billiton (BHP +0.3%) and Mitsubishi will cut ~230 jobs from their jointly owned Saraji coal mine in Australia's Queensland state, highlighting the challenges facing coal producers in the country as Asian demand wanes and prices stagnate near multiyear lows.
    • Hard coking coal contracts for Q1 have fallen to their lowest on record to stand at $143/metric ton, down 6% Y/Y from $152.
    • Saraji produces up to 8M metric tons/year of coking coal, used to make steel; the nearby Norwich Park and Gregory mines already have been closed by BHP and Mitsubishi in response to lower demand.
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  • Jan. 30, 2014, 12:15 PM
    • China has been bidding up premiums for high-quality iron ore: The price of Australia lump is fetching a $17-$18.6/metric ton premium with 62% iron content - six months ago the premium was $8 - while pellets with 65% iron ore content are trading at a $40-$42/metric ton premium, up $10 in the same period.
    • It's good news for big miners such as Vale (VALE +0.6%), BHP Billiton (BHP +1%) and Rio Tinto (RIO +0.9%), which are among the top suppliers of high-grade ores.
    • J.P. Morgan says the higher premiums for pellets, lumps and for higher quality ore and the reduced risk of higher freight rates bodes well "for a company like Vale, which has high quality ore and pellets, we may see higher than expected realized prices driving earnings surprises."
  • Jan. 23, 2014, 11:13 AM
    • Cliffs Natural Resources (CLF -3.2%) is looking into whether its Bloom Lake project makes sense in the current environment, and Morgan Stanley believes a decision could come when CLF reports its Q4 earnings on Feb. 13.
    • The firm surveyed investors to get a sense of the consensus opinion around Bloom Lake and found it perhaps overly bullish; most investors expect CLF to find a new partner for the remaining ~$1.25B needed to complete Phase II, but the firm thinks it could be difficult to find a new partner on reasonable terms.
    • The firm also forecasts higher shipping costs, so it lowers its price target on CLF to $12 from $14 while maintaining its Underweight rating.
    • The latest report indicating a cooling Chinese economy is weighing on CLF and other global base-metal miners: RIO -0.8%, BHP -1.2%, VALE -2.3%.
  • Jan. 21, 2014, 5:54 PM
    • BHP Billiton (BHP) says it produced 48.9M tons of iron ore in the three months through December, up 16% Y/Y, taking production for the first half of its FY 2014 to a record 97.8M tons, up 19% Y/Y.
    • Despite the strong H1, BHP stops short of upgrading full-year guidance on fears that storms could disrupt mining in Australia's Pilbara region.
    • BHP also reports a 6% Y/Y rise in quarterly copper output to 439.9K tons, and a 30% increase in met coal production to 11.5M tons.
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  • Jan. 21, 2014, 12:21 PM
    • Mining stocks are having a rough ride today as the pace of growth slows in China's GDP and industrial production, and Goldman Sachs comes out bearish on copper and iron ore prices.
    • Proclaiming "the sunset of the Iron Age starts in 2014," Goldman believes the steel intensity of the Chinese economy will be on a downward trend from 2014 onwards following a decade where steel production growth outpaced GDP growth.
    • Some indicators already point to lower rates of steel production growth, the firm says; Chinese steel-making capacity is near its peak, and a greater focus on environmental regulations is driving the closure of an increasing number of blast furnaces.
    • Goldman expects Iron ore to fall to $108/ton in 2014 and $80/ton in 2015.
    • CLF -6.1%, RIO -3.2%, VALE -4%, FCX -1.9%, BHP -1.6%.
  • Jan. 16, 2014, 2:08 PM
    • “We would rather be too early than too late," Citi analysts say on going bullish on the global mining sector for the first time in three years.
    • Yes, Citi is concerned about the potential for long-term structural demand for commodities in China and the potential of a seasonal slowdown in Q1, but the firm foresees better bottom-up fundamentals, notably from big diversified miners such as top picks are BHP Billiton (BHP +2.6%), Rio Tinto (RIO +3.6%) and Glencore (GLCNF, GLNCY).
    • The firm expects a flat commodity-price environment ahead and a reduction in volatility, improving U.S. and European growth that will help boost commodities, and weakening commodity currencies from major exporters such Australia, New Zealand and South Africa that will boost miners.
    • Earnings momentum has become positive too, as miners are cutting costs, improving balance sheets and aligning with shareholders’ interests.
    • Citi still doesn't like gold and base-metal stocks; its least favorite big-cap miner is Anglo American (AAUKF, AAUKY).
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  • Jan. 9, 2014, 3:55 PM
    • Rio Tinto (RIO -2.2%) is named a Top Pick in European Metals and Mining by Bernstein analyst Paul Gait, who cites Rio's top-quality asset base and notes that Rio's cash generation continues to surprise the market.
    • "Top line surprises combined with Rio throttling back on capital expenditure will drive a gap between cash flow generation and outflows," the firm says, adding there's "no reason why the resultant de-gearing of Rio’s balance sheet should not see its dividend double."
    • The kind words aren't helping RIO shares, as the big global miners are broadly lower today: BHP -1.2%, VALE -2.8%, CLF -6.5%, FCX -1.3%.
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  • Jan. 8, 2014, 5:15 PM
    • Iron ore prices were relatively strong last year but China's moderating economy combined with new iron ore mines coming online in Australia may impact prices, which could hurt the outlook for companies such BHP Billiton (BHP) and Rio Tinto (RIO), WSJ reports.
    • Australia's iron ore miners remain upbeat on the outlook, however, saying they continue to sell everything they dig up.
    • RIO argues it has some of the lowest mining costs in the world, meaning it can still make money if prices weaken; the miner says it costs less than $50/ton to produce and ship ore from the resource-rich Pilbara region in Western Australia.
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  • Dec. 30, 2013, 10:03 AM
    • BHP Billiton (BHP +0.4%) and Rio Tinto (RIO +0.8%) suspend port operations in the Pilbara region of Australia as a cyclone moves towards the coast, the Daily Telegraph reports.
    • BHP says tie-down activities at Port Hedland have been completed, while RIO says ship loading and rail operations have been suspended.
    • Production impacts are not yet known, but for now inland mining operations are continuing as normal.
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  • Dec. 27, 2013, 4:29 AM
    • The WSJ shines a light onto "shadow warehouses," a hidden system of facilities that store tens of millions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and commodity merchants.
    • The warehouses operate outside the London Metal Exchange's system, are unregulated, and don't provide details of their holdings. As a result, it's unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.
    • The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum.
    • Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.
    • Relevant tickers include VALE, AA, AWC, KALU, MNSF, CENX, NOR, BHP, RIO, ACH.
  • Dec. 10, 2013, 11:45 AM
    • BHP Billiton (BHP -1%) says it plans to spend $4B annually to grow its U.S. onshore oil and gas production to 500K boe/day by 2017, including growing its U.S. shale gas business to 200K barrels of liquids per day.
    • "Onshore U.S. is well positioned to become another major cash-flow generator for BHP," the head of BHP's petroleum business tells investors. (also)
    • BHP plans to maintain steady production in its conventional oil and gas portfolio by focusing on low-risk, high-return investments close to existing infrastructure, including infill drilling at Shenzi, Pyrenees, Atlantis and Mad Dog where individual wells can deliver investment returns greater than 90%.
  • Dec. 10, 2013, 8:07 AM
    • BHP Billiton (BHP) indicates it will attempt to limit annual spending to $15B, a deep cut to the $21.7B it spent in the last financial year on projects from iron ore deposits in Australia's Pilbara region to deep-sea oil and gas fields in the U.S. Gulf of Mexico.
    • "I don't quite know exactly what the right level is," CEO Andrew Mackenzie tells an investor meeting, "but I can tell you at levels of around US$15B I am very confident that we can grow this company and provide an appropriate cash return to our shareholders."
    • BHP isn't alone in its tapering, as Rio Tinto (RIO) recently unveiled plans for a marked cut in spending in the years ahead, and Vale (VALE) also has disclosed a 2014 investment budget nearly 20% smaller than its peak level in 2011.
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  • Nov. 22, 2013, 8:49 AM
    • China's new economic blueprint is encouraging for mining companies, Rio Tinto (RIO) chairman Jan du Plessis says, forecasting demand from the world's second-largest economy for commodities including copper and iron ore to continue to grow strongly in the coming years.
    • du Plessis says China would undoubtedly become the world's largest economy as its population swells, one day overtaking the U.S.
    • The remarks echoed confidence expressed earlier by rival BHP Billiton (BHP).
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  • Nov. 21, 2013, 8:15 AM
    • China's weaker trade and softer manufacturing activity has been a slight drag on BHP Billiton's (BHP) revenue growth compared with earlier expectations, Chairman Jac Nasser says, but the company remains confident in China's economic outlook.
    • The continuation of Chinese demand growth is a concern for the world's mineral and energy exporters, and BHP is no exception, but slower growth - a 7.5% GDP growth target this year - is quite fast vs. the rest of the world, and the Third Plenum's plans for more reliance on market forces and opening the door to private-sector and foreign investment in some areas is cause for optimism.
    • "We're confident in what we've seen coming out of the plenum," Nasser says. "We have a lot riding on China... 30% of our revenues are driven by Chinese demand."
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  • Nov. 20, 2013, 6:50 PM
    • Coal (KOL) may become the new tobacco if activist investors have their way; growing numbers of them, concerned about greenhouse gas emissions, are calling to divest holdings in companies that mine and burn coal.
    • The U.K. today joined a U.S. commitment to minimize funding of foreign coal-fired power stations and says it will seek wider support for the pledge from other nations and development banks.
    • What galls the activists: Global demand for coal is not in retreat. In 2011, coal was used to generate 30.3% of the world’s primary energy, the highest level since 1969, and the share slipped only to 29.9% last year.
    • Like tobacco companies, coal producers may move to paying high dividends to attract investors amid an uncertain longer term future for the fuel.
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Company Description
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.