Research archive for BIL

BHP Billiton released their first half numbers this morning, and they were slightly lower than consensus. Expectations were for around 10 billion Dollars worth of profits for the first half, but the company reported 9.94 billion Dollars worth of profits. Which was 5.5 percent lower when compared to the 10.7 billion Dollars reported this time last year. This is only for the first half, 10 billion Dollars (well nearly)? Huge. Revenue was 9.7 percent higher at 37.48 billion Dollars. Basic earnings per share were 186.8 US cents, the dividend was hiked to 55 cents per share. In Rand terms at the current exchange rate, that is 7.57, this translates to 1414 ZAR cents worth of earnings per share and a dividend of 416 ZAR cents per share. Does the stock look cheap then at last evenings close of 259 ZAR? The short answer is yes.

BHP Billiton have announced that they are exiting the titanium minerals industry, by selling their 37 percent stake in Richards Bay Minerals to Rio Tinto. Rio will basically double their stake from here. I guess that there is not much more to say about that, other than the stake is non-core and not key to the overall business.

Some company news from one of our most held companies in our client base, BHP Billiton this morning has released their production report for the half year to end December. There are many highlights in some very key areas, including a record annualised iron ore production in Western Australia of some 178 million tons. Copper volumes increased 27 percent in the second half of the err.... first half of their financial year. A good second half to the first half. Petroleum production increased 36 percent, thanks to the recent US acquisitions.

It turns out that diamonds are not always your best friend. At least this is the case for BHP Billiton. You might have heard us talk about the diamond business that the world's biggest mining company has, but it has always been a small contributor. You remember just less than one month ago, we wrote in a post titled Anglo American acquiring De Beers stake from Oppenheimer family, about the opposite from their industry peer. In that piece, there was the link to the Anglo presentation in which they compare themselves to some other diamond producers. Both BHP Billiton and Rio Tinto are on that list, although those businesses are no way core to either of those companies.

Yesterday BHP Billiton came out with a report labelled the BHP Billiton petroleum Investor Briefing which is very significant to Billiton investors. This is because BHP have focused much of its expansion in this area after investing up to $20bn in gas assets over the last 6 months. In the last fiscal year they made up to 23% of their profits from its energy division. Recently the BlackRock (who are one of BHP's biggest investors) MD Evy Hambro came out with a swipe at the company for not providing adequate reasoning for the big expansion. Well here is their answer.

Let us jump into the commodities pool now and have a look at the BHP Billiton production report. If you want to download the report, and I suggest as a shareholder that you do just that, do so here -> BHP BILLITON PRODUCTION REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2011. Sorry about the capitals, I know it is shouting, but that is from their report, not me shouting. I do that with a !

After having acquired the necessary approval from the South Australian government with regards to environmental issues, BHP Billiton have been quick on the draw to announce a Significant Commitment to Olympic Dam Expansion, as per the press release. It has been a bit slow over at Olympic Dam, in terms of developing the asset, but there have been more than just a few issues.

One thing worth noting yesterday on the BHP Billiton results, I do not think I explained it properly (not great), with regards to net gearing at year end, which was 9 percent. But post this recent acquisition of Petrohawk Energy, net gearing is now 27 percent. There was one thing that completely outraged me, it was the exact point that Paul had made before Marius Kloppers, the BHP Billiton CEO was interviewed on the American version of Squawk Box, the usual hosts are all away, so Michelle Caruso-Cabrera is one of the current replacements.

BHP Billiton released their full year numbers this morning. Byron was so excited (notwithstanding not making the squad) that he has not slept in the days leading up to these results. The immediate number that jumps at you is what looks like a big beat in profits, expectations that I had seen ranged from 22.1 to 22.5 billion USD of profits, the actual number came in at 23.648 billion. That is a comfortable beat on profits. Basic earnings per share reported came in at 429.1 US cents, the dividend declared was 101 US cents per share for the full year, the final dividend is 55 cents. I remember a time when a client was disappointed with one quarter of the current dividend around five years ago. Revenue was up 35 percent from last year to 71.7 billion US Dollars. Huge. Massive.

More news from the commodities sector involves BHP Billiton and that massive bid for Petrohawk. The deal has been completed and BHP have secured 97.4% of the US shale gas producer who will then become a wholly owned subsidiary of BHP. Since the bid the Nymex gas price has dropped 13% but the deal is a long term play on what seems a very depressed gas price for a commodity being utilised more and more in an energy hungry globe.

OK, I remember a time when we used to sit and wait for this report like crazy, but in truth, we are long equities in quality stocks, so we are committed to owning a quality stock like BHP Billiton. Unless something changes of course. Here goes: BHP BILLITON PRODUCTION REPORT FOR THE YEAR ENDED 30 JUNE 2011. Important news on one of our mostly widely held stocks.

Next we have BHP Billiton making a $12.1bn cash bid for Petrohawk, an independent oil and gas company engaged in the exploration, development and production of natural gas properties in the United States. Another natural gas investment from the mining giant who bought Shale assets from Chesapeake in February for $4.75bil. It is no secret that this resource is the craze. Take note Karoo folk. The Petrohawk Board has already advised shareholders to accept the offer. I don't blame them, the offer came in at a 65% premium to the closing price of $23.49, $38.75 per share is what they are offering.

Good to see that they are implementing their organic growth programme which is expected to exceed $80bn over a span of 5 years. Wow this company is in huge growth mode and it definitely has the resources to do it. For this quarter they have invested $9.8bn throughout their major projects focussing on Western Australia Iron Ore (WAIO) where they plan on doubling production to 220 million tonnes an annum. They definitely see sustainable demand coming through in the medium to long term. That is a good confidence boost for global growth expectations.

BHP Billiton have sort of thrown water on a Woodside Petroleum bid. In fact the plot thickens as the Shake My Head, I mean Sydney Morning Herald reports that the Western Australian premier, Colin Barnett, is long Woodside Petroleum aware of talks between the two parties. And is happy if BHP Billiton takes the 24 percent Shell stake, but not the whole company. Check it out ---> Barnett says he was 'aware' of BHP-Woodside talks.

You might, or might not, have seen this story doing the rounds, that BHP Billiton are looking at Woodside Petroleum. Apparently. As a business that would obviously compliment their oil and gas business, which makes up around one quarter of group profits. As far as I can understand it, the Australian Stock Exchange have even asked the fellows over at Woodside to explain the surge in their share price since the ides of March, when the rumour first surfaced. I suppose if I was the board, I would say, "guys, have you noticed the oil price has ticked up sharply?" That would be my answer to the ASX.