Finance

BHP Billiton share price steady as investors eye full-year results

BHP Billiton share price steady as investors eye full-year results

In its results presentation BHP said it now considers onshore oil and gas in the USA "non-core" assets and is "actively pursuing options to exit" the business including through a trade sale, an asset swap, demerger or a separate listing.

Early in August Rio Tinto produced a thumping half year profit, and showered dividends on its shareholders, while Fortescue Metals Group posted a $US2.1 billion net profit after tax on Monday.

The Anglo-Australian firm rewarded shareholders with a final dividend of 43 cents compared to 14 cents past year.

Given the earnings miss, it could be argued the increase in the dividend was generous.

S&P Global set a GBX 1,300 ($16.88) price target on BHP Billiton plc and gave the company a neutral rating in a research note on Wednesday, April 26th.

It's likely that Elliott would have preferred the free cash being generated by BHP to be used for a share buyback, rather than cutting debt.

It's also somewhat mixed on BHP's decision to put up the onshore US shale assets up for sale, as Elliott's preferred path was to spin all of the company's petroleum assets into a separate, New York-listed company.

Confirmation that the world's biggest miner wants to exit its controversial USA shale assets came when the company released its fiscal 2017 results.

Onshore US capital expenditure is expected to be up to US$1.2 billion for the 2018 financial year. BHP's 2011 shale deals had been too costly, poorly timed and didn't deliver the expected returns, Mackenzie said on the call.

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Higher prices for commodities such as iron ore and coal, both for coking coal and energy coal, helped contribute to the improved performance of one of Australia's biggest companies.

BHP also said there was policy uncertainty in China over metallurgical coal, but the outlook for the seaborne market was positive.

BHP has "probably picked an opportune time because we've seen the oil price come up from a bottom and the cycle looks firmer than it did 12 months ago", David Lennox, an analyst at Fat Prophets, said in an interview with Bloomberg TV.

BHP shares last traded yesterday for $25.70.

'Our relentless focus on cash flow, capital discipline and value creation should allow us to significantly increase our return on capital by the 2022 financial year'.

Nonetheless, BHP's Sydney shares remain well below levels that prevailed when the company wasn't in such a strong position.

BHP managed to cut costs at its iron ore division in Western Australia to just $14.60 a tonne compared to today's price of $78.

For Elliott to declare more than a partial victory, it's likely that the share price will have to post solid gains, while returns to shareholders increase incrementally.