No joy for BHP investors at company AGM

No joy for BHP investors at company AGM
by: BARRY FITZGERALD
From: The Australian
October 24, 2014 12:00AM
BHP Billiton has dashed investor hopes for more certainty around the timing of increased shareholder returns — but it has offered some cheer on the economic front, tipping that growth in China would hold above 7 per cent.
Speaking at the British leg of BHP’s annual meeting season, chief executive Andrew Mackenzie last night talked up the fact that the company had returned $US64 billion to shareholders in dividends and buybacks in the past 10 years.
“Everything we are doing, including productivity accelerated by the demerger (of Newco), is aimed at increasing cash returns to you, our shareholders,’’ Mr Mackenzie said.
But he did not give any guidance to just when a step-up in cash returns would occur, saying only that when it did occur, it would be in a consistent, predictable and ­efficient manner.
His comments echo those made on August 19 at the release of BHP’s June year profit report. Disappointment that a share buyback or a major step-up in dividends was not announced with the result, and continued commodity price weakness have been key factors in BHP’s 15 per cent share slide since — a $US32bn ($36.4bn) value hit.
Chairman Jac Nasser told shareholders that events this year, including in recent weeks, had served as a reminder of how “unpredictable and volatile geo­politics and economics can be’’.
“Despite this, growth in emerging countries remains solid at around 4.5 per cent and some developed economies have bounced back,’’ Mr Nasser said.
Importantly for commodity markets, Mr Nasser said that while the property sector in China was slowing, other sectors were showing resilience. “Coupled with the ability to draw upon a range of other supportive measures, growth is still expected to come in above 7 per cent,” Mr Nasser said.
Ahead of the meeting, BHP shares fell 63c, or 1.84 per cent, to $33.64 on the ASX.
BHP is now down $6.04, or 15 per cent, on its August 19 level of $39.68.
At the time, Mr Mackenzie said that with net debt still above the desired level of $US25bn, and with iron ore prices in sharp retreat, BHP was “not quite ready’’. He said BHP wanted to start any capital management from a “position if strength’’.
That way, he said, the company would be able to implement an “enduring program that could be done in a more consistent and predictable manner’’.
Mr Mackenzie told last night’s meeting in London that shareholders should expect BHP’s productivity under his leadership to continue. “I am very happy to be predictable,” he said.
“We have already made significant cost savings and we will continue to drive costs down even further, targeting another $US3.5bn in annualised productivity gains by the end of the 2017 financial year. We reduced our capital expenditure by a third in financial-year 2014. We will reduce it again this year and we will only invest where we see a solid return.
“We will generate strong cashflow and, as a consequence, deliver good returns for you, our shareholders.’’
BHP’s June year profit was 23 per cent higher at $US13.83bn on which there was a 4 per cent increase in annual dividend to $US1.21. Earlier this week it released its production report for the first (September) quarter of its 2015 financial year.
Record production in eight operations and four commodities, plus outperformance in oil and coking coal, was not enough to change market expectations that in the face of the broad decline in commodity prices, profit this year is under the pump.
Market consensus is for a 7 per cent fall in profit to $US12.8bn, with production increases and cost-cutting not expected to be enough to offset falls in commodity prices from last (financial) year’s averages.

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on October 23, 2014, in miscellaneous, other minerals, potash. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: