BHP Billiton Reports Worst-Ever Annual Loss

[Porker]

SYDNEY—BHP Billiton Ltd., the world’s No. 1 miner by market value, recorded its worst-ever annual loss as US$7.7 billion in charges exacerbated a deep slump in commodity prices.

Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion.

HEARD ON THE STREET

• Heard on the Street: BHP Billiton Mines Cash for Uncertain Future
  

As recently as 2011, annual profits topped $20 billion.

The loss deepens the gloom in the global mining sector, which has responded to global economic uncertainty and low prices for commodities from copper to iron ore by closing mines, laying off workers and slashing returns for investors.

BHP’s earnings also took hits from problems not shared by many of its mining peers: a deadly disaster at an iron-ore mine in Brazil and weak oil and natural-gas markets. Those enormous charges were largely against the Brazilian venture and U.S. onshore energy assets—$2.2 billion and $4.9 billion, respectively. BHP’s petroleum business, intended to help it through bad times in metals markets, lost $7.72 billion after its write-downs.

BHP Billiton’s annual loss was the first at group level since it was formed in 2001 through a merger of Australia’s BHP Ltd. and U.K.-based Billiton PLC. Prior to that, BHP last posted a full-year loss in 1999, also a time of weak prices.

ENLARGE

 

“We are clearly very disappointed with this result. However the underlying performance of our business... remains and is getting stronger,” Chief Executive Andrew Mackenzie said.

The company, which in February abandoned a policy of stable or rising capital returns, cut its final dividend by 77%. Still, at 14 U.S. cents a share, it was higher than the 8-cent minimum required under its policy, which BHP said reflected confidence in the health of its balance sheet.

BHP didn’t signal a recovery in commodity prices was imminent, instead saying that abundant supplies of crude oil and metals such as copper are likely to persist. Also, it sees the economy of China—top consumer of most of BHP’s commodities, including iron ore—as merely stabilizing rather than rebounding.

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In response, BHP said it continues to seek $2.2 billion in savings over the two years ending next June by making its operations more productive, while cautiously advancing new projects such as a U.S. Gulf of Mexico deep-water oil field that can boost revenue.

“We are starting to open up at long last a decent margin and therefore strong cash-generating capacity,” Mr. Mackenzie said. The company’s London-listed shares were up 3.5% in midday trading, helped by forecasts BHP could double free cash flow in the year ahead if commodity prices remain stable.

Last year, BHP shifted assets in several niche commodities such as manganese and alumina into a new company called South32 Ltd. that was listed in Australia, London and South Africa. Mr. Mackenzie has justified the overhaul—one of the biggest attempted by global miners in the current downturn—as a way to boost BHP’s profits by focusing only on its biggest assets.

The strategy hasn’t paid off yet: While South32 shares are up by a quarter over the past year, BHP’s are down 20%. Mr. Mackenzie insists BHP would be worse off now if it hadn’t restructured, and calls the company’s current portfolio “pretty close to what I would say is ideal for BHP Billiton right now.”

Credit Suisse said the 2016 financial year should be the low point in the cycle for BHP’s earnings, despite global uncertainty that includes China’s economic slowdown and the U.K.’s vote on June 23 to leave the European Union. Other analysts think BHP may also need to set aside more money due to last year’s deadly dam failure at the Brazilian iron-ore mining operation it jointly owns with Vale SA.

To be sure, BHP isn’t alone in grappling with tough commodity markets. In July, Anglo American PLC reported a first-half loss of $813 million as it recorded a $1.2 billion impairment for some Australian coal assets.

However, BHP’s purchase of energy assets near the peak of oil and gas prices have compounded its mining woes. The company plowed about $20 billion into U.S.shale assets in 2011, becoming one of the biggest petroleum producers outside of large integrated oil companies such as Exxon Mobil Corp.

The oil-price slump has made that unit “a problem child,” Credit Suisse said in an Aug. 9 note.

Still, Mr. Mackenzie on Wednesday stood by the energy business for what he called its damping effect on long-range volatility.

“Our petroleum business is a better business by being inside a minerals business; our minerals business is a better business by being alongside our petroleum business,” he said.

[Jamesc]

 

SYDNEY—BHP Billiton Ltd., the world’s No. 1 miner by market value, recorded its worst-ever annual loss as US$7.7 billion in charges exacerbated a deep slump in commodity prices.

Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion.

 

ENLARGE

 

 

Its the Chinese, they stop buying coal and iron ore from BHP by a lot.

 

The good thing is

 

Now that the Chinese are not buying so much from Australia

 

the Australians can now really tell the Chinese what they really

 

think of them.

 

[Kangadrool]

Isn't it better for the environment?

 

The Ozzie should be happy, no?

 

[Jamesgetz]

Isn't it better for the environment?

 

The Ozzie should be happy, no?

Aussies who depend on natural resources won't be happy... Lots of job cuts in down under for this industry

[Ktglfc]

 

SYDNEY—BHP Billiton Ltd., the world’s No. 1 miner by market value, recorded its worst-ever annual loss as US$7.7 billion in charges exacerbated a deep slump in commodity prices.

Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion.

HEARD ON THE STREET

• Heard on the Street: BHP Billiton Mines Cash for Uncertain Future

As recently as 2011, annual profits topped $20 billion.

The loss deepens the gloom in the global mining sector, which has responded to global economic uncertainty and low prices for commodities from copper to iron ore by closing mines, laying off workers and slashing returns for investors.

BHP’s earnings also took hits from problems not shared by many of its mining peers: a deadly disaster at an iron-ore mine in Brazil and weak oil and natural-gas markets. Those enormous charges were largely against the Brazilian venture and U.S. onshore energy assets—$2.2 billion and $4.9 billion, respectively. BHP’s petroleum business, intended to help it through bad times in metals markets, lost $7.72 billion after its write-downs.

 

BHP Billiton’s annual loss was the first at group level since it was formed in 2001 through a merger of Australia’s BHP Ltd. and U.K.-based Billiton PLC. Prior to that, BHP last posted a full-year loss in 1999, also a time of weak prices.

ENLARGE

 

“We are clearly very disappointed with this result. However the underlying performance of our business... remains and is getting stronger,” Chief Executive Andrew Mackenzie said.

The company, which in February abandoned a policy of stable or rising capital returns, cut its final dividend by 77%. Still, at 14 U.S. cents a share, it was higher than the 8-cent minimum required under its policy, which BHP said reflected confidence in the health of its balance sheet.

BHP didn’t signal a recovery in commodity prices was imminent, instead saying that abundant supplies of crude oil and metals such as copper are likely to persist. Also, it sees the economy of China—top consumer of most of BHP’s commodities, including iron ore—as merely stabilizing rather than rebounding.

Advertisement

 

In response, BHP said it continues to seek $2.2 billion in savings over the two years ending next June by making its operations more productive, while cautiously advancing new projects such as a U.S. Gulf of Mexico deep-water oil field that can boost revenue.

“We are starting to open up at long last a decent margin and therefore strong cash-generating capacity,” Mr. Mackenzie said. The company’s London-listed shares were up 3.5% in midday trading, helped by forecasts BHP could double free cash flow in the year ahead if commodity prices remain stable.

Last year, BHP shifted assets in several niche commodities such as manganese and alumina into a new company called South32 Ltd. that was listed in Australia, London and South Africa. Mr. Mackenzie has justified the overhaul—one of the biggest attempted by global miners in the current downturn—as a way to boost BHP’s profits by focusing only on its biggest assets.

The strategy hasn’t paid off yet: While South32 shares are up by a quarter over the past year, BHP’s are down 20%. Mr. Mackenzie insists BHP would be worse off now if it hadn’t restructured, and calls the company’s current portfolio “pretty close to what I would say is ideal for BHP Billiton right now.”

Credit Suisse said the 2016 financial year should be the low point in the cycle for BHP’s earnings, despite global uncertainty that includes China’s economic slowdown and the U.K.’s vote on June 23 to leave the European Union. Other analysts think BHP may also need to set aside more money due to last year’s deadly dam failure at the Brazilian iron-ore mining operation it jointly owns with Vale SA.

To be sure, BHP isn’t alone in grappling with tough commodity markets. In July, Anglo American PLC reported a first-half loss of $813 million as it recorded a $1.2 billion impairment for some Australian coal assets.

However, BHP’s purchase of energy assets near the peak of oil and gas prices have compounded its mining woes. The company plowed about $20 billion into U.S.shale assets in 2011, becoming one of the biggest petroleum producers outside of large integrated oil companies such as Exxon Mobil Corp.

The oil-price slump has made that unit “a problem child,” Credit Suisse said in an Aug. 9 note.

Still, Mr. Mackenzie on Wednesday stood by the energy business for what he called its damping effect on long-range volatility.

“Our petroleum business is a better business by being inside a minerals business; our minerals business is a better business by being alongside our petroleum business,” he said.

 

 

 

Will this spread to us, and some listed companies in SGX?

dangerous ...

[Kusje]

Its the Chinese, they stop buying coal and iron ore from BHP by a lot.

 

The good thing is

 

Now that the Chinese are not buying so much from Australia

 

the Australians can now really tell the Chinese what they really

 

think of them.

 

 

Dun blame iron ore la.

 

http://www.forbes.com/sites/timtreadgold/2016/08/21/a-rising-iron-price-and-falling-costs-helps-andrew-forrest-make-2-7-billion-in-eight-months/#612feb7362b8

[Jamesc]

Dun blame iron ore la.

 

http://www.forbes.com/sites/timtreadgold/2016/08/21/a-rising-iron-price-and-falling-costs-helps-andrew-forrest-make-2-7-billion-in-eight-months/#612feb7362b8

 

This is the crux of the problem.

 

There is massive over capacity in steel in China.

 

So what do they do? Pump more money into loss

 

making steel mills to increase production.

 

This is simple unsustainable and its just a matter

 

of time before they cannot keep pumping money

 

and they whole thing will collapse.

 

[Wyfitms]

[Angchug]

About time for them to take a good look at their staff salary and allowance. 5,000 staff in Singapore. Most of the angmo are getting over sgd50k/month excluding allowance. Can even claim massage sgd8,000/year.

[1fast1]

Its the Chinese, they stop buying coal and iron ore from BHP by a lot.

 

The good thing is

 

Now that the Chinese are not buying so much from Australia

 

the Australians can now really tell the Chinese what they really

 

think of them.

 

The other good thing is

 

If enough Australians lose their jobs

 

They can go back to doing what they're really good at

 

Being criminals

 

Honouring their ancestors.

 

[Angcheek]

 

SYDNEY—BHP Billiton Ltd., the world’s No. 1 miner by market value, recorded its worst-ever annual loss as US$7.7 billion in charges exacerbated a deep slump in commodity prices.

Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion.

HEARD ON THE STREET 

 

You in O&G meh 

[Porker]

You in O&G meh

I'm not but I know everything

[Kangadrool]

O&G can be Ores and Grains too.

[Ktglfc]

What stocks can buy or for that matter, what stocks can avoid ? :))

[Kangadrool]

Buy defensive like Shong Shong, SingMeowStar... If Town Councils listed, I want to buy also.

What stocks can buy or for that matter, what stocks can avoid ? :))

 

[Jamesc]

I'm not but I know everything

[Porker]

From a woman's point of view

 

its very hard to live with a man

 

who knows everything.

 

No wonder Porker is gay / not married.