Mining giant BHP Billiton yesterday announced its financial results for the December 2013 half year, which showed that the company posted a 15% increase in the Underlying earnings before interest and tax (EBIT) to US$12.4 billion and an increase in the Underlying attributable profit by 31% to US$7.8 billion.
BHP Billiton CEO Andrew Mackenzie said the increase in performance and revenue was propelled by a substantial improvement in productivity and additional volume from the Company’s low-risk, largely brownfield investment program.
“The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results,” he said.
“Annualised productivity led volume and cost efficiencies totalling US$4.9 billion are now embedded and this is expected to increase to US$5.5 billion by the end of the 2014 financial year.”
According to the media release by BHP, the company has achieved an US$7.8 billion increase in free cash flow during this period, driven by a 65% increase in net operating cash flow and a 25% reduction in cash outflows from investing activities.
“The Group’s opportunity rich portfolio remains a key point of differentiation. By maintaining strict financial discipline and increasing internal competition for capital we intend to further differentiate ourselves by creating a more capital efficient organization,” Mr Mackenzie said.
“On this basis, we believe an average rate of return of greater than 20% is achievable for our portfolio of major development options.”
The Group interim dividend of 59 US cents per share remained the same as last year’s final dividend, consistent with recent practice. The resultant 3.5 per cent increase in the interim distribution highlights the power of the Company’s progressive dividend policy.
These favourable financial results are expected to result in reducing the company’s net debt from US$27.1 billion to US$25 billion by the end of the 2014 financial year.
“With strong free cash flow, selective investment and continued simplification, we are well placed to extend our strong track record of capital management,” Mr Mackenzie said.
“I want to acknowledge the hard work of BHP Billiton employees and their contribution to these strong results. Together we are improving the productivity and competitiveness of the Company and the countries in which we operate.”
In addition, Mr Mackenzie also revealed that the company has managed to improve its safety performance in the half year, reducing the number of Total Recordable Injury Frequency to a record low of 4.4 per million hours worked.
BHP Billiton’s financial results for the December 2013 half year can be found here.