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BHP Billiton declares bumper dividend but productivity disappoints
BHP Billiton declared a bumper dividend after rising commodity prices drove strong profit growth in the first half of the miner's financial year.
Underlying attributable profit rose 25% to $4.1bn (£2.9bn) in the six months to the end of December. The figure was short of the average analyst forecast of about $4.3bn and investors were disappointed with performance on productivity.
Prices of commodities such as copper and iron ore rose as the global economy grew strongly. Rising prices pushed up revenue to $21.8bn from $18.8bn and drove free cash flow of $4.9bn.
BHP declared an interim dividend of 55 cents a share - up 38% from a year earlier and 17 cents more than the company's minimum payout policy.
The results showed BHP emerging from the commodity price slump of 2015 that was caused partly by a slowdown in the world economy. Global growth has picked up and surpassed expectations, driving demand for metals and other commodities.
Andrew Mackenzie, BHP's chief executive, said: "Higher commodity prices and a solid operating performance delivered free cash flow of US$4.9 billion. We used this cash to further reduce net debt and increase returns to shareholders through higher dividends ...We remain firm in our resolve to maximise cash flow, maintain discipline and increase shareholder value and returns."
However, BHP's shares fell 3.2% to £15.12 at 07:45 GMT as investors picked up a setback in progress on productivity. BHP said a $496m negative productivity movement was mainly predicted and that it expected to hit its target of $2bn productivity gains by the end of 2019.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "It feels harsh to be criticising BHP this morning. Profits are increasing rapidly, debt is falling, and the interim dividend is well ahead of market expectations. But BHP's better performance is being driven by improved commodity prices, which are out of the company's hands, while productivity, which it can control, is heading in the wrong direction."
The company said two workers died during the first half - one at its Permian operation in Texas and another at the Goonyella Riverside mine in Queensland.
BHP has this week come under renewed pressure from shareholders to consider dropping its dual listing. The Times reported on Tuesday that Baring Asset Management and Plato Investment Management, which control shares worth about $280 million, have asked the board to set out why it believes the time is not right to consider cancelling one of its listings in London or Australia, adding their voice to that of activist Elliott Advisors, which called it the structure "obsolete and value destroying".