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BHP Billiton (BHP) FY18 Earnings, Revenues Miss Estimates

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BHP Billiton Limited (BHP - Free Report) reported financial results for fiscal 2018 (ended Jun 30, 2018). For fiscal 2018, earnings per American Depositary Share (ADS) came in at roughly $3.35, up 32% from the prior fiscal but missed the Zacks Consensus Estimate of $3.40.
 
Reveneus & Margins Improve Y/Y
 
Revenues for fiscal 2018 totaled $43.6 billion, up from $36.1 billion recorded in the prior fiscal. However, revenues lagged the Zacks Consensus Estimate of $44.8 billion.
 
Underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $23.2 billion for fiscal 2018, reflecting year-over-year increase of 20%. Higher prices and increased volumes helped offset the impact of higher costs, unfavorable exchange rate movements, inflation and other net movements.
 
Balance Sheet & Cash Flow
 
Cash and cash equivalents as of Jun 30, 2018 came in at $15.9 billion, up from $14.2 billion at the end of fiscal 2017. Total interest-bearing liabilities totaled $26.8 billion, down from $30.5 billion as of Jun 30, 2017. Capital and exploration expenditure was $6.8 billion, up 29% from $5.2 billion incurred in the prior year.
 
As of fiscal 2018-end, net debt was at $10.9 billion, down from $16.3 billion as of fiscal 2017 end and $26.1 billion as of fiscal 2016 end. The company intends to keep its net debt at the lower end of its targeted range of $10 billion to $15 billion.
 
During the reported fiscal, the company paid dividends worth $5.2 billion compared with $2.9 billion paid during fiscal 2017. The company’s board has announced that it will pay a record final dividend of 63 cents per share. This is equivalent to a payout ratio of 69%.
 
Other Updates
 
On 27 Jul, BHP Billiton announced it had entered into agreements for the sale of its entire interests in the Eagle Ford, Haynesville, Permian and Fayetteville Onshore US oil and gas assets for a combined base consideration of 10.8 billion, payable in cash. This move is consistent with its long-term plan to continue simplifying and strengthening its portfolio to generate shareholder value and returns.  Once completed, it expects to return the net proceeds to shareholders.
 
The company is making its operations more efficient on the back of smarter technology adoption across the entire value chain along with reducing capital and exploration expenses. The company is also steadily lowering debt with increased cash generation. Over the last year, shares of this Zacks Rank #2 (Buy) stock yielded a return of 5.2%, against the industry’s decline of 7%.
 
 
 
Other Stocks to Consider
 
Some other top-ranked stocks in the same sector include KapStone Paper and Packaging Corporation , Ingevity Corporation (NGVT - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) . While KapStone Paper and Ingevity sport a Zacks Rank #1, Ashland Global carries a Zacks Rank #2.
 
KapStone Paper and Packaging has a long-term earnings growth rate of 14%. Its shares have gained 51% in the past year.
 
Ingevity Corporation has a long-term earnings growth rate of 12%. The company’s shares have been up 40% over the past year.
 
Ashland Global has a long-term earnings growth rate of 10%. The stock has gained 19% in a year’s time.
 
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