BHP's Disappointing Half-Year - Analyst Blog

Australia based diversified minerals company, BHP Billiton Ltd. (BHP) reported its financial results for the first half of fiscal 2013, ended Dec 31, 2012. Earnings per share stood at 79 cents, down 58.0% from $1.88 in the year-ago period. Lower selling prices and cost inflation hurt earnings in the quarter.

Revenue

Revenues for the reported period dropped 14.1% year over year to $32.2 billion from $37.5 billion as a result of challenging global industry as well as lower prices of commodities. Underlying EBIT was recorded at $9.8 billion, down 38.3% year over year, as a result of lower commodity prices and inflation.

Balance Sheet

Cash and cash equivalents, at the end of the period, were recorded at $5.1 billion, up from $4.8 billion in the preceding half year. Net debt, comprising interest bearing liabilities less cash, was $30.4 billion, up from $23.6 billion as of June 30, 2012.

Cash Flow

Net operating cash flows decreased 47.9% to $6.4 billion from $12.3 billion in the corresponding period last year. Capital and exploration expenditure totaled $12.2 billion for the half year ended Dec 31, 2012. Expenditure on major growth projects came in at $9.7 billion, which includes $3.4 billion on Petroleum projects and $6.3 billion on Minerals projects.

BHP Billiton announced an interim dividend of 57 cents to be paid on Mar 28, 2013, to shareholders on record on Mar 8, 2013. Moreover, in line with the company’s strategy to trim its portfolio, BHP divested around $4.3 billion assets in the reported half year, which are either complete or awaiting closures.

Outlook

As on the closure of half year 2013, BHP had roughly 20 projects in progress, which are expected to yield revenue by 2015. BHP expects the economy to start reviving in the coming quarters; thereby boosting demand and prices. However, low cost supply by other players in many markets is more likely to hamper the rise in prices.

BHP currently holds a Zacks Rank #3 (Hold). Other stocks worth a look at in the industry are Denison Mines Corp. (DNN), Xstrata Plc. (XSRAY) and Aluminum Corporation Of China (ACH); each carrying a Zacks Rank #2 (Buy).

ALUMINUM CP-ADR (ACH): Free Stock Analysis Report

BHP BILLITN LTD (BHP): Free Stock Analysis Report

DENISON MINES (DNN): Free Stock Analysis Report

 (XSRAY): ETF Research Reports

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