Higher Payouts Seen as BHP Combats Cost Creep -- Earnings Preview

   By Rhiannon Hoyle 
 

BHP Billiton Ltd. (BHP.AU) will report its fiscal-year earnings before the Australian market opens on Tuesday. Here's what you need to know:

REVENUE FORECAST: The world's largest mining company by market value is expected to record revenue of US$45.66 billion for the 12 months through June. That would be up from US$38.29 billion in the year-earlier period, according to a median of nine analyst forecasts.

PROFIT FORECAST: BHP is expected to post a profit before one-off items of US$8.80 billion, up from US$6.73 billion a year earlier, according to the analysts' predictions.

---WHAT TO WATCH---

CAPITAL RETURNS: BHP should follow rivals including Rio Tinto PLC (RIO.LN) in boosting investor returns as the company benefits from firmer commodity markets, an ongoing productivity drive and gains from asset sales. The analyst forecasts point to a full-year dividend of around US$1.15 a share. That would be up from US$0.83 a year earlier. BHP has also pledged to give proceeds from the sale of its U.S. onshore oil-and-gas unit--to be offloaded in deals with BP PLC and Merit Energy Co. for a combined US$10.8 billion--back to shareholders, although it isn't expecting to get that cash until the end of October. When announcing those deals last month, BHP said it had yet to decide on whether it would put the money toward dividends or buybacks.

COSTS: Investors will also be keeping a close eye on comments about mining costs, given recent remarks from rivals that bills for power and other necessities are getting bigger. Shares in Rio Tinto, the world's No. 2 mining company, fell sharply after its first-half earnings report earlier this month as investors focused on higher costs, even the company announced a record interim dividend and plans to repurchase more shares.

CHARGES: One-time charges will once again weigh on BHP's bottom line. The miner has already flagged expectations of a roughly US$2.8 after-tax--or US$2.9 billion pretax--impairment charge against the carrying value of the U.S. onshore assets it's selling to BP and Merit Energy.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

August 19, 2018 23:43 ET (03:43 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.