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BHP Billiton announces net profit of USD 13.8 billion for year ended June 30th 2104

Global mining giant BHP Billiton posted a 23.2 percent jump in annual net profit to USD 13.83 billion on Tuesday, as spending cuts and productivity gains offset weaker commodity prices.


1. BHP Billiton reported a record low Total Recordable Injury Frequency of 4.2 per million hours worked and we suffered no fatalities during the period.

2. A significant improvement in productivity underpinned strong financial performance as underlying attributable profit increased by 10% to USD13.4 billion.

3. Productivity led volume and cost efficiencies of USD 2.9 billion, exceeding target by 61% or USD1.1 billion

4. Further improvement in productivity and reduction in capital and exploration expenditure by 32% to USD15.2 billion, delivered a substantial USD8.1 billion increase in free cash flow, despite weaker commodity prices

BHP Billiton CEO Mr Andrew Mackenzie, said: “In the last 12 months we have delivered on our commitments. Our operational performance continued to improve, enabling us to exceed production guidance for a number of our core commodities including iron ore, metallurgical coal and petroleum liquids. Productivity-led volume and cost efficiencies of USD 2.9 billion were USD 1.1 billion ahead of plan, meaning we have now embedded more than USD 6.6 billion of sustainable, annualised productivity-led gains over the last two years.”

He added: “BHP Billiton is becoming a simpler, more productive company and the demerger proposal we have announced today is an important step forward. We plan to create an independent global metals and mining company based on a selection of high-quality aluminium, coal, manganese, nickel and silver assets. Separating these businesses via a demerger has the potential to unlock shareholder value by allowing BHP Billiton to improve the productivity of its largest businesses more quickly and by creating a new company specifically designed to enhance the performance of its assets. With a simpler portfolio, we are targeting at least another USD 3.5 billion of productivity-related gains by the end of the 2017 financial year.”

He said “Our Iron Ore business clearly illustrates this opportunity. At Western Australia Iron Ore, we now expect the debottlenecking of our mines and inner harbour infrastructure to increase our supply-chain capacity to 290 Mtpa (100 per cent basis). The additional 65 Mtpa of capacity is likely to have a capital intensity below USD 50 per annual tonne with the improvement in productivity and economies of scale also expected to significantly reduce unit costs.

Source – Strategic Research Institute Steel Guru

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