BHP’s results important for ASX miners

Published 24-FEB-2016 12:08 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Today’s release of BHP’s half year results is a somewhat important event for ASX listed miners, given that BHP two largest commodities have been significant price pressure, and that as one of the largest and lowest cost producers, its results are something of a bell-weather for the performance of listed companies in the Materials and Energy sectors.

Sam Green advisor at Options Educator, Traders Circle reports.

Of the headline numbers, revenue was down 37%, to $US15,712M, and the profit fell 233% to a $US5,669M loss. As a result, BHP cut their dividend to $US0.16, from $US0.62 for the prior period; a reduction of almost 75%.

Whilst this result appears poor, it is worth noting that the loss figure includes exceptional impairment and loss items. These include $US6,132M of exceptional losses, comprised primarily of impairment to US based oil projects ($US4,884M) and losses associated with the Samarco dam failure (US$858M). The underlying profit for BHP (excluding these exceptional loss items) came in at $US415M.

Other highlights include a 20% cost reduction per tonne of iron ore extracted (now a cost of $US15 per tonne). With reductions across the cost of production of most of BHP’s commodities:

These cost reductions helped to partially offset dramatic falls in realised prices for BHP’s commodity sales:

The Copper and Iron Ore divisions were the best performers, showing underlying profits despite large price reductions, whilst the Coal and Petroleum division were the worst performers, showing large underlying losses, even before the large asset impairments.

If BHP’s results can be extrapolated to the rest of the market, they would indicate that low cost iron ore and copper producers may be good buys at the current level. And of the energy producers, those with more of a natural gas focus are probably the best picks.

The other thing that BHP’s results highlight is the strength of Rio Tinto’s report from 10 days earlier, which showed underlying profits (totalling $US4,540M) across all of their major dividsions. They also held their dividend unchanged from the prior year.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.


Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free