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BHP Billiton Reports Q1 Operational Results, Reaffirms View

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Premium industrial metals & minerals company, BHP Billiton Limited (BHP - Free Report) , recently reported first-quarter fiscal 2018 (ended Sep 30, 2017) operational results.

Aggregate iron-ore output came in at 56 million tons (Mt) during the reported quarter, down 3% year over year. The downside was stemmed by weaker-than-expected production accrued from the Western Australia iron-ore mine, reduced opening of stockpile levels (following the Mt Whaleback screening plant fire in June 2017) and planned maintenance activities conducted in other mines.  

However, BHP Billiton reaffirmed its iron-core productivity within the range of 239-243 Mt (estimating a year-over-year upside of 3-5%) for fiscal 2018. The company believes that the funding for South Flank project ( in June 2017) will likely augment gross output of this major steel-making metal in the quarters ahead.

Notably, energy coal’s output in the reported quarter came in at 7 Mt, down 2% year over year. The fall was witnessed primarily due to lower productivity of the company’s Cerrejon mine.

Nonetheless, it should be noted that in the fiscal first quarter, output volumes of petroleum dipped 8% year over year to 50 million barrels of oil equivalent (MMboe). However, productivity guidance for fiscal 2018 has been reaffirmed within the range of 180-190 MMboe.

Notably, metallurgical coal output was 11 Mt in the reported quarter, flat year over year.

In addition, aggregate copper output came in at 404 kilo tons (Kt), up 14% year over year. The uptick came on the back of sturdy productivity accrued from Escondida, Olympic Dam and Antamina copper mines.

Moving Ahead

BHP Billiton intends to boost its near-term operational performance on the back of increased safety measures, greater capital discipline and elevated productivity. The company anticipates that the successful accomplishment of the three-major petroleum and potash projects (worth $5.1 billion) will boost its productivity.

The company also stated that the primary development work of its Spence Growth Option and Mad Dog Phase 2 projects commenced during the third quarter. These projects are likely to bolster the company’s aggregate productivity in the near future.

Our Take

Over the last six months, BHP Billiton’s shares yielded a return of 19.7%, outperforming 12.5% growth recorded by the industry.

 

Notably, this Zacks Rank #2 (Buy) stock currently flaunts a VGM Score A.The company is poised to grow on the back of escalating prices of major core metals and operating cash cost improvements. Moreover, we believe the upward trend in iron-ore prices will likely benefit BHP Billiton going forward. Iron-ore prices were up 1.5% to $61.83 per ton as of Oct 17, 2017.

Other Stocks to Consider

Other top-ranked stocks in the same space are listed below:

Albemarle Corporation (ALB - Free Report) has an average positive earnings surprise of 7.17% for the last four quarters and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Air Products and Chemicals, Inc. (APD - Free Report) also has a Zacks Rank of 2 and generated an average positive earnings surprise of 1.77% over the trailing four quarters.

Cabot Corporation (CBT - Free Report) , another Zacks Rank #2 stock, pulled off an average positive earnings surprise of 6.44% during the same time frame.

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