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The Australian mining giant $BHP reported June Quarter earnings Tuesday and announced it was tripling it's dividend. Underlying profit below expectations but sharply higher on last year with strong cash flow and BHP announced its exit from Shale

BHP Ironore

The company's tier one segments include minerals exploration, production and processing (coal, iron ore, copper and manganese ore) and hydrocarbon exploration, production and refining (oil and natural gas).

Earnings:

Net profit of $US6.7 billion ($AUD8.4 billion) below analyst expectations of a $US7 billion but up sharply on last year's US$1.2 billion profit.

BHP Billiton Limited ASX: $BHP 

Market Reaction Aug 22 Close AUD 25.98 +0.28 (+1.09%)

The result was driven by BHP's iron ore division, where earnings before interest and tax surged to $U7.2 billion from $US3.7 billion in 2016. BHP said it achieved its goal of $US2.2 billion of productivity gains and cost cuts across the two years to June 30, and guides for another $US2 billion in productivity gains across 2018 and 2019.

Free cashflow of $US12.6 billion during the 2017 year enabled the company to cut net debt from $US26.1 billion to $US16.3 billion.

The company's statutory profit of $US5.9 billion was weighed down by $US1 billion worth of exceptional items, including costs associated with the Samarco disaster, lost productivity and costs associated at with the Escondida, and withholding tax on Chilean dividends. 

BHP will pay a final dividend of US43¢, compared with last year's final payout of US14¢.

Chief executive Andrew Mackenzie comment highlights

  • "very strong financial year". 
  • "Free cashflow was $US12.6 billion, our second highest on record. We used this cash to reduce net debt by nearly $US10 billion and return $US4.4 billion to shareholders,"  
  • "Productivity gains across our simpler portfolio of tier one assets increased our return on capital to 10 per cent.
  • "This strong momentum will be carried into the 2018 financial year, with volume growth of 7 per cent and further productivity gains expected."

Retiring chairman Jac Nasser said $BHP had "laid the foundations to significantly improve our return on capital and grow long-term shareholder value" over the past five years by slashing costs by 40 per cent and achieving productivity gains of $US12 billion. 

Shale Asset Sale

BHP announced it had determined its shale assets "are non-core and we are actively pursuing options to exit these assets for value".

Source: http://www.bhpbilliton.com/

From The TradersCommunity News Desk

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