BHP Billiton, the Anglo-Australian diversified commodity group, published its best half-year earnings since 2014 on Tuesday with underlying profit hitting $4.1bn in the six months to December.
Rising commodity prices, particularly copper and oil, also helped drive strong free cash generation of $4.9bn, but top line profits were hit by a one-off charge of $2bn related to recent US tax reforms.
Half-year financial highlights
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 14% to $11.2bn
- Underlying EBITDA margin dips 1 percentage point to 53%
- Net debt down by $0.9bn to $15.4bn
- Capital and exploration expenditure rose 6% to $2.9bn
- Interim dividend of 55 US cents a share proposed, up from 40 cents in H1 2016
While the company reported a negative movement in productivity to the tune of $496m related to its Olympic Dam and Queensland Coal and Petroleum operations, it said its productivity guidance for the full year remained unchanged.
Billiton's economic and commodities outlook remained largely positive, with the group expecting global growth in 2018 to remain in the range of 3.5%-3.75% helping keep demand growth robust.
Andrew Mackenzie, chief executive (above), said: "Higher commodity prices and a solid operating performance delivered free cash flow of $4.9 billion. We used this cash to further reduce net debt and increase returns to shareholders through higher dividends.
"We are on track to deliver further productivity gains of $2 billion by the end of the 2019 financial year as we secure improvements in both operating and capital productivity, aided by smarter technology application across our value chain.
"We remain firm in our resolve to maximise cash flow, maintain discipline and increase shareholder value and returns."
The bottom line earnings failed to match market expectations, however, and the shares fell in early trade on London Stock Exchange, down 3.57% at £15.06.
Shares in BHP Billiton listed on the Sydney Stock Exchange ended the Australian trading session down 0.41% at A$31.30.
The shares were not yet trading on the London Stock Exchange. Update to come.
Picture courtesy of BHP Billiton