Mining giant BHP returns to profit, sells US oil assets
BHP Billiton recorded an annual net profit of $5.89 billion (4.98 billion euros) for the year to June 30 - after a $6.39 billion loss in the previous period, which had been the company's worst ever full-year result.
The Melbourne, Australia-based company's turnaround was built on higher prices for iron ore and coal in the wake of growing Chinese industrial demand. However, the result was diminished by a $4.9 billion write down in the value of BHP's US shale oil assets.
Moreover, a dam failure in November 2015 at an iron ore mine co-owned by BHP and Vale in Brazil killed 19 people and caused the worst environmental disaster in the country's history. That still cost the company $381 million in the latest fiscal year, down from $2.2 billion in the previous year.
BHP chief executive Andrew Mackenzie described the result as a very strong financial year. "This strong momentum will be carried into the 2018 financial year, with volume growth of 7 percent and further productivity gains expected," Mackenzie said in a statement. "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," he added.
In the period, the company's net debt fell $10 billion to $16.3 billion. Capital and exploration expenditure fell by 32 percent to $5.2 billion. As a result, BHP said it would reward shareholders with a final dividend of 43 cents, well up from 14 cents it offered last year.
BHP also announced that it wanted to sell its onshore US shale operations because they were "non-core" to the business.
"We are actively pursuing options to exit these assets for value," BHP said in a statement. "In the meantime, we will complete well trials, acreage swaps and assess mid-stream solutions to increase the value, profitability and marketability of our acreage."
The announcement follows a push by New York-based Elliott Advisors, a significant shareholder in the company, for BHP to restructure the business, including spinning off its US oil and gas operations. BHP had previously rejected Elliott's proposals in April.
Shares in BHP rose 1.36 percent to Aus$26.05 ($20.69 or 17.5 euro) in Sydney Tuesday, reflecting investors' support of plans to exit the US shale business.