BHP Reports Rise in Profit and Record Dividend
August 20 2018 - 7:08PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY -- BHP Billiton Ltd. said fiscal-year net profit fell 37%
because of one-time charges, but the world's biggest miner by
market value recorded a 33% rise in underlying profit and a record
final dividend, aided by higher prices and production for most of
its commodities.
BHP on Tuesday reported a net profit of $3.71 billion for the
year through June, down from $5.89 billion in the 12 months prior.
Weighing on the company's bottom line were $5.2 billion in
impairment charges, mainly tied to the company's U.S. onshore
oil-and-gas assets, which it has struck deals to sell.
The miner recorded an underlying profit, stripping out one-time
charges, of $8.93 billion, or $9.62 billion from continuing
operations. That was ahead of an $8.80-billion median of nine
analyst forecasts.
Directors declared a final dividend of 63 cents a share, taking
BHP's full-year payout to $1.18 a share, up from 83 cents the year
prior.
"Across our dramatically simplified portfolio of tier-one
assets, we see this year's strong momentum carried into the medium
term as our leadership, technology and culture drive further
increases in productivity, value and returns," said Chief Executive
Andrew Mackenzie.
BHP has been enjoying tailwinds from stronger commodity prices.
Average prices for its oil, copper and steelmaking coal were up
26%, 23% and 9%, respectively. Iron ore prices were slightly weaker
during the 12-month period, down 3%.
The company has also been producing more. Full-year output of
copper jumped 32%, while production of iron ore was 3% higher and
steelmaking coal was up 7%. Its petroleum division was the outlier,
with an 8% fall in output.
BHP isn't alone in lifting returns to investors. Rio Tinto PLC
earlier this month pledged $7.2 billion in shareholder returns,
including a record interim dividend.
In July, BHP said BP PLC would buy the bulk of its U.S. onshore
oil-and-gas unit for $10.5 billion, while it also penned a separate
$300 million agreement to sell its Fayetteville shale business in
Arkansas to closely held Merit Energy Co.
The company at the time said it would also use that cash for
dividends or share buybacks once the deals were completed in
October. On Tuesday, it reiterated it would confirm how and when
that cash will be used once the sales are completed.
BHP joined the chorus of miners cautioning on cost inflation, as
the industry faces pressure from rising bills for energy and other
necessities.
It also lowered its projection for productivity gains, saying it
now expects savings of $1 billion in the 2019 fiscal year from a
prior forecast of $2 billion in the two years through June 2019.
BHP said the guidance was lowered because of asset sales and
challenging operating conditions at some Australian coal mines.
The company said threats to global economic growth have
increased due to rising trade protectionism.
"Near-term prospects for the U.S. economy are sound, with
cyclical fundamentals solid," BHP said. "However, we expect the
increase in protectionism to weigh on consumer purchasing power and
international competitiveness."
The miner also forecast China's growth to slow modestly in 2018.
Commodity producers face challenges from an easing economy in
China, the top buyer of a lot of natural resources, where spending
on fixed assets such as factory machinery has fallen to its lowest
in nearly two decades.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
August 20, 2018 19:53 ET (23:53 GMT)
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