BHP Billiton posted strong results for its first half 2017, driven by higher prices and further cost efficiencies
The following table summarises 1H17 results:
| $m | 1H FY17 | 1H FY16 | % |
| Underlying EBITDA | 9,896 | 5,944 | 65% |
| Underlying EBITDA margin | 54% | 40% |
|
| Underlying EBIT | 5,982 | 1,342 | 346% |
| Underlying attributable profit | 3,244 | 412 | 687% |
| Net debt | 20,057 | 25,921 | (23%) |
| Gearing | 24.3% | 30.3% | |
Source: BHP, FIIG Securities
Results summary:
- 1H17 underlying EBITDA was up 65% at US$9.9bn per corresponding period (pcp), with margins at 54% compared to 40% pcp. The strong underlying EBITDA was attributable to higher commodity prices, lower operating cash costs and other net movements, partly offset by unfavourable movements in currency and inflation
- Most business segments reported stronger underlying EBITDA, with the exception of BHP’s petroleum business segment, as shown in Figure 1:
Figure 1
Source: BHP
- Net operating cashflow improved by 46% to US$7.7bn in 1H17 on the back of higher commodity prices, further cash cost efficiencies and lower capital, and exploration expenditure of US$2.7bn (down 38% pcp). This generated an increase in free cashflow US$5.8bn in 1H17 compared to US$1.2bn pcp
- Net debt reduced to US$20.1bn at 31 December 2016 (US$26.1bn at 30 June 2016, US$25.9bn at 31 December 2015) primarily due to strong free cashflow generation. Consequently, gearing fell to 24.3% at 31 December 2016 (30.3% at 30 June 2016, 29.7% at 31 December 2015).
- The company maintained a minimum fifty percent dividend payout policy and announced a US$0.40 per share interim dividend (compared to US$0.16 per share pcp), which will be funded from free cashflow
Outlook
Key highlights from BHP’s guidance for the group:
- Capital and exploration expenditure are expected to be at US$5.6bn and US$6.3bn for FY17 and FY18, respectively
- Total copper production for FY17 is under review due to ongoing industrial action at Escondida
A link to the results is available here.