Research archive for BIL

BHP Billiton lent a strong hand there, the news of the potential spin off of the noncore assets is starting to attract a lot of attention from everyone. There are a couple of stories this morning, including BHP may seek tax exemption for demerger: report and The $20bn question mark hanging over BHP Billiton's non-core assets. See that very last line, which suggests that a trimmer Mick Davis could acquire assets that BHP see as noncore: Ex-Xstrata boss ready to build new mining company X2 Resources. From other folks that I have been reading, this might well be kite flying on a grander scale, whilst continuing along the way selling smaller assets from time to time.

Talking of unbundling, the talk that BHP Billiton could let go of their "weaker" performing businesses and focus on the core sent the price in London up 0.35 percent. Oh dear, that is nothing. The two ADR's (BHP and BBL) performed a whole lot better, BBL was up 1.85 percent, whilst BHP was up 2.05 percent in a rising market in New York. This morning the stock in Sydney is up 0.86 percent. Locally the stock added 1.76 percent. As in the old days when the sun never set on the British Empire (all their "territories" on a world map were in pinkish), the sun never really sets on the BHP Billiton share price.

It is April the first. Which means that if you thought that the Boks were going to turn out in red, then I suppose you were duped. How possibly could they wear Red and Gold against Wales, who have a scarlet jersey? But BHP Billiton are not in the interest of doing that and have released a SENS titled Market Speculation, which suggests that whilst they like there other businesses, they will focus on five segments, Copper, Iron Ore, Coal and Petroleum as well as Potash. Which means that those other businesses could be spun off.

This week we have seen some of our miners taking heat, with Kumba Iron Ore in particular really feeling it. Monday saw Kumba Iron Ore down by 8.5%, about 4% of it was due to a dividend, and then a further 5.4% yesterday. Why the huge drop in price? The price of iron ore dropped on Monday by 8.3% to $104.7 per ton, it's lowest in over a year. The spark that started the drop was concerns that the demand for steel from China and by extension iron ore would not be as high as anticipated. Once the price started dropping, it gained momentum due to people using iron ore as collateral for loans, which meant that as the price dropped they had to sell some ore to ensure that their collateral value did not drop too low.

This morning we received a release from BHP Billiton titled Innovation and Trade Key to Meeting Global Energy Challenges which looks at their view on energy demand now and in the future. This statement from CEO Andrew Mackenzie I found very interesting.

BHP Billiton have released their first half numbers this morning in Melbourne. I guess the results were released all over the inter webs, so in essence it is a global release, but the company is still headquartered in Melbourne, Australia. The sporting capital of the world we are led to believe, I suppose that they host many events of global importance, including the Aussie Open tennis and the F1 Grand prix. Add to that the annual AFL final (Aussie rules) and the MCG test match and I guess you are spoilt for choices. It is strange then to think that the city had to wait so long to have their own super 15 rugby team.

BHP Billiton released an operational update on Wednesday for the half year ending December 2013. The results were slightly lower than analyst estimates, but were still positive with increased output in 8/10 of their commodity divisions. The down side however is that commodity prices have fallen since December 2012, with the major exception being the price of Natural gave which is up 15% (good news for Sasol). The impact of the increased output with lower sales prices will only be released on the 18th February, when the company reports their financial results.

Tuesday was a busy day. The big release was results from BHP Billiton. Here is the presentation, I urge you to give it a look. It is quick and easy to understand. More importantly, some of the graphs there explain so much about the business, where it has come from and where it is going. Firstly, here are the financial highlights, then we can look at operations in more detail.

I couldn't sleep last night. No, not true, I slept well, it is a by product of boarding school, being able to sleep anywhere and at the drop of a hat. The reason why I wouldn't have slept, if I had sleeping problems, would have been that BHP Billiton released their full year production report this morning.

This morning we have received the third quarter production report from BHP Billiton, the quarter that just ended. I guess at face value the report looks a little light in some departments, but the severe weather in Australia specifically impacted on iron ore production. Yesterday Byron and I saw one of those mega Komatsu trucks that were driverless, carrying off a whack of iron ore. Not in person of course, but rather on the screens in front of us, which admittedly are looking a little old. But they still work, and in keeping low cost over here at Vestact, I suspect they are not going to be changed unless we HAVE to change them.

I saw two pieces of news on Billiton yesterday which I thought were interesting enough to share with you. The first was a statement released by the company themselves regarding copper and how supply may exceed demand this year. As you can imagine the demand for copper over the last ten years has surged like never before. How do miners react? They ramp up production. Last year Chinese demand grew by 11.7%, according to analysts this number will only increase by 5% in 2013.

Now, we can actually get to the interim results themselves having dealt with the management change over at BHP Billiton. Revenues decreased by 14.1 percent to 32.2 billion Dollars. Phew, that is a big number for a materials company. Underlying EBIT fell 38 percent mostly as a result of inflationary pressures, a weaker US Dollar and of course the most obvious one, lower commodity prices. Better volumes and good cost controls were not enough to offset the decline in underlying commodity prices. Profits excluding exceptionals clocked 5.7 billion Dollars, but attributable profits including exceptional items of 1.4 billion Dollars slumped 58 percent to 4.2 billion Dollars. This is the part that you could be forgiven for thinking that Kloppers was pushed as a result of lower profits. The last time I checked, Marius Kloppers himself had very little sway over commodity prices. The company continued to divest from non-core assets, remarkably asset sales totalled 4.3 billion Dollars (announced and completed) for the half. Astonishing, translate that to Rands at the current exchange rate, 8.835 and you get to almost 38 billion Rands. Or basically a company locally that would just sneak into the top 40. Wow.

We have a long standing {insert word that rhymes with spoke/smoke/broke} in the office here, where Byron can't sleep before the BHP Billiton results because he is so excited. Of course that is not true, but we always have a chuckle. Not laughing I guess is Marius Kloppers. Or perhaps he is, who knows? We did know that he was going to retire at some stage, that was telegraphed last November. This morning, along with interim results, Marius Kloppers has announced his resignation. No doubt to spend more time with his fishing rod, I mean his family and garden. Kloppers has been at the helm of BHP Billiton since the 1st of October 2007 when Chip Goodyear resigned. Previous to that Kloppers ran the Non-Ferrous Materials division, and has been at the group since the beginning in 2001. Kloppers went to school just down the drag here, at the corner of Jan Smuts and Empire, at Helpmekaar.

It was so huge that I couldn't sleep last evening. No, I am kidding, I could. You know the saying, I slept like a baby. I woke up every two to three hours crying for food. Food and hunger, the fact that you can just read this electronically means that you don't share misery of 1 in 7 people on the planet who are hungry daily, that is right 925 million odd people -> 2012 World Hunger and Poverty Facts and Statistics. A company that is committed to producing more fertilizer inputs by building the world's largest potash mine in BHP Billiton, Byron wrote about it last Halloween: Jansen, BHP Billiton's big potash mine is coming.

A couple of years back Sasha found this article which derived the term Mesofacts. It was coined by a fellow called Samuel Arbesman who now has a blog called mesofacts.org. Here is the definition of a mesofact from the website.