BHP Billiton Seen With Higher Profits, Lower Debt -- Earnings Preview

   By Rhiannon Hoyle 
 

BHP Billiton Ltd. (BHP.AU) is scheduled to announce its half-year earnings for the six months through December after the Australian market closes on Tuesday. Here's what you need to know:

EARNINGS FORECAST: An underlying profit of US$3.14 billion is the median of six analyst forecasts compiled by The Wall Street Journal. A year ago, BHP reported an underlying profit of US$412 million.

DIVIDEND: An interim dividend of US$0.31 a share is forecast, up from 16 cents a year ago.

WHAT TO WATCH:

--DEBT VS DIVIDEND: With earnings tipped to have bounced back, thanks in a large part to higher commodity prices, investors want to see what BHP plans to do with its extra cash. Analysts broadly tip debt reduction to remain a priority over dividends (despite forecasting a rebound in cash payouts from a year ago). "We expect the focus to be on cash generation and debt levels as opposed to capital management," Macquarie said in a Feb. 20 note.

--PRODUCTIVITY PROGRESS: Even as commodity markets recover, miners have promised to keep productivity plans front and center. At the start of this fiscal year, BHP pledged to find another US$1.8 billion in productivity gains and the market will be seeking a progress report on that goal. At an investor meeting in October, Chief Executive Andrew Mackenzie said the miner "will build on our momentum and strong culture of safety and productivity to create significant future value" for shareholders.

--CAPITAL EXPENDITURE: Deutsche Bank says its analysts will be looking for "any changes to fiscal-year 2017 capex guidance of US$5.4 billion, including revisions to the U.S. Onshore [division] budget of US$600 million." Also in focus will be any further details on the timing of BHP's Spence Hypogene copper project, Caval Ridge coking coal expansion and Jansen potash development.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

February 20, 2017 00:31 ET (05:31 GMT)

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