Back to top

Analyst Blog

Mining giant BHP Billiton Limited (BHP - Analyst Report) recently reported strong production volumes for fiscal 2014 (ended Jun 30, 2014), increasing 9% year over year, along with hitting annual records in 4 commodities and 12 operations. While production of iron ore, copper, petroleum, coal, alumina and manganese alloys increased, output of manganese ore, nickel and aluminum declined year over year.

Iron ore and metallurgical coal production increased 20% year over year to 203.6 million tons and 45.1 million tons, respectively. Also, copper production increased 2% to 1.7 million tons. However, nickel and manganese ores production declined 7% and 3% year over year to 0.143 million tons and 8.3 million tons, respectively.  

The company witnessed a significant production increase in the Western Australia Iron Ore (WAIO) facility, primarily led by the early commissioning of Jimblebar mine. Moreover, metallurgical coal production exceeded guidance due to record-hitting production and sales volume in the Queensland Coal mine. The same is expected to increase 4% to 47 million tons in fiscal 2015.

In fiscal 2014, BHP Billiton completed six major projects along with two other projects carrying out their first production. The company’s Caval Ridge coal mine, which was completed ahead of schedule and within budget, achieved its first production in June this year. Exiting fiscal 2014, BHP Billiton had eight low-risk, brownfield major projects under development, worth $14.1 billion.

In an effort to simplify its portfolio, BHP Billiton has completed transactions worth over $6.7 billion in the U.K., the U.S., South Africa, Australia and Canada. The company, in order to focus on core assets, intends to continue streamlining its portfolio.

BHP Billiton is expected to release fiscal 2014 earnings on Aug 19. The Zacks Consensus Estimate for the same is pegged at $5.29 per share, reflecting a year-over-year hike of 19.8%.

With a market capitalization of $195.0 billion, BHP Billiton holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Hi-Crush Partners LP (HCLP - Snapshot Report), U.S. Silica Holdings, Inc. (SLCA - Snapshot Report) and Dominion Diamond Corp. (DDC - Snapshot Report). While Hi-Crush Partners and U.S. Silica Holdings sport a Zacks Rank #1 (Strong Buy), Dominion Diamond Corp. holds a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.