BHP's earnings broadly met our expectations

Overall we are pleased with the diversified miner's first-half results

Mark Taylor 15 February, 2010 | 4:34PM
Facebook Twitter LinkedIn

BHP Billiton's underlying first-half 2010 earnings declined 7% to $5.7 billion, close to our $5.9 billion forecast. Headline profit increased 134% to $6.1 billion, including a $433 million post-tax reversal of Ravensthorpe nickel impairments. Key drivers versus first half 2009 were lower iron ore, coal, and aluminium prices, all but offset by a combination of higher copper and nickel prices, general volume gains, and cost control, excluding exchange rate and inflation impacts. Prices were more important than volumes by a factor of four. Half year production records were set in iron ore and petroleum.

BHP bettered our petroleum, carbon steel materials, and diamond division forecasts, but under-performed on the aluminum, copper, and nickel front. Copper operating costs were worse than anticipated, exacerbated by the Clark shaft outage at Olympic Dam, responsible for 75% of hoisting capacity at the mine. Re-commissioning and ramp-up at Clark is expected is to finish by the end of June.

Overall we are pleased with the result. Underlying EBIT margin remained strong at 34%. ROIC was 18.6% despite new as-yet-non-productive capital. BHP spent $4.6 billion in the period, and completed the Alumar alumina refinery expansion in Brazil, the WA iron ore Rapid Growth 4 project, and Klipspruit energy coal in South Africa.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BHP Group PLC1,862.40 GBX-0.29Rating

About Author

Mark Taylor  is an equity analyst at Morningstar.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies       Modern Slavery Statement