BHP posts massive $US5.89 billion full-year profit


BHP posts massive $US5.89 billion full-year profit

The latest period result included an exceptional loss of US$842 million, while the prior year result included an exceptional loss US$7.6 billion.

BHP (BHP.AX, BLT.L, BBL, BHP) reported that attributable profit for the year ended 30 June 2017 was US$5.9 billion or 110.4 cents per share, compared to an attributable loss of US$6.4 billion or 120.0 cents per share in the prior period. That compared with $1.2 billion a year earlier, the lowest since fiscal 2001, and missed the $7.3 billion average among 18 analysts' forecasts compiled by Bloomberg.

Even BHP's underlying earnings, excluding one-off costs and write-downs, only managed a 454 per cent rise to $US6.7 billion, well below the 500-plus per cent increase that most analysts had tipped, which would have taken earnings as high as $US7.5 billion.

An exit from shale "is likely to appease domestic investors, although at this point the financial outcome remains uncertain", Melbourne-based RBC Capital Markets analyst Paul Hissey said in a note.

Higher prices for commodities such as iron ore and coal, both for coking coal and energy coal, helped contribute to the improved performance of one of Australia's biggest companies.

For fiscal 2017 BHP recorded underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $US20.29 billion. Free cash flow also surged, coming in at $12.6 billion.

The company's net debt shrunk to $US16.3 billion.

"This strong momentum will be carried into the 2018 financial year, with volume growth of seven per cent and further productivity gains expected", says Mackenzie.

Overall, it's hard to sustain an argument that Elliott forced BHP to pay a higher dividend, although credit should be given to the fund for putting BHP's shareholder returns under a microscope with their April letter.

Elliott wants BHP to sell out of USA shale, and has also called for an in-depth, independent review of BHP's petroleum business.

BHP has "probably picked an opportune time because we've seen the oil price come up from a bottom and the cycle looks firmer than it did 12 months ago", David Lennox, an analyst at Fat Prophets, said in an interview with Bloomberg TV.

Iron ore prices peaked at almost $US95 a tonne in February this year and have remained volatile since but now trade around $US75 a tonne.

A number of other large investors also recently added to or reduced their stakes in the stock.

At the moment 4 analysts are watching BHP Billiton plc (NASDAQ:BBL), 2 rate it "Buy", 1 "Outperform", 1 "Underperform", 0 "Sell", while 0 "Hold". The company presently has a consensus rating of "Hold" and an average target price of $34.24.