The intensive cost cutting of the past year to 18 months, and the strong surge in iron ore prices and production in the back half of 2013, have paid off for BHP Billiton (BHP) and its hundreds of thousands of shareholders who will receive a higher interim dividend.
The world’s biggest miner reported this morning that final profit had almost doubled to $US8.1 billion ($A9 billion).
For that you can thank the company’s WA iron ore business and its coal operations, especially in Queensland, which saw profits leap from $79 million in the six months to December 2012, to $US510 million in the latest half year. Contributions from copper and petroleum/potash were lower.
The iron ore business saw earnings leap 35% to $US6.5 billion, from $US4.792 billion as global iron ore prices remained higher than forecast for the half year.
The result was better than most analysts had forecast, and has allowed BHP to raise dividends to $US0.59, equal to the final paid for 2012-13 and up 3.5% on the previous interim.
BHP 1Y – BHP beats expectations
That dividend will be paid in Australian dollars to local shareholders – so the weaker dollar could see it boosted to more than 64 A cents a share. The final conversion rate will be announced shortly on the company’s website.
BHP joins rival miner, Rio Tinto and a growing number of other companies, large and small in currently reporting higher payments to shareholders – most notably the Commonwealth Bank and Telstra last week.
The underlying result of $US7.8 billion was a clear improvement on the $US5.68 billion underlying earnings that BHP announced one year ago.
The improvement adds to the belief that the company will be able to lift full year profits in the year to June 30, 2014 for the first time since 2011.
Key to the improvement was a 9% rise in the company’s underling profit margin to 38% (driven by the high returns in iron ore) and a rise in the return on capital to 22%.
BHP shares rose 0.8% on Monday to end at $38.02 ahead of this morning’s release.
BHP Billiton Results for the Half Year Ended 31 December 2013
