Hargreaves Lansdown is impressed by BHP Billiton’s (LON:BLT) continued willingness to return cash to shareholders, the analysts have said. The comments came after the blue-chip miner updated investors on its full-year performance yesterday revealing that it had returned to full-year profit, as it cut costs and benefitted from stronger commodity prices.
BHP Billiton’s share price rallied yesterday, adding 2.09 percent to close at 1,394.50p, outperforming the broader London market, with the benchmark FTSE 100 index closing 0.86 percent higher at 7,381.74 points. The group’s shares have added nearly a third to their value over the past year, and are up by some six percent in the year-to-date.
Hargreaves Lansdown commented yesterday that while headlines were likely to centre on BHP Billiton’s decision to exit its onshore oil and gas business in the US, the results showed that management’s strategy was ‘going smoothly’.
“The focus on cost control at BHP’s already very low-cost assets, means cash generation is soaring now commodity prices have turned,” Hargreaves’ analyst Nicholas Hyett said, as quoted by Citywire. “Net debt is tumbling, and as that falls towards more sustainable levels it will free up cash for other uses.”
The analyst further pointed out that while next year a significant portion of the spare cash was going on increased capital spending, particularly in petroleum and expanding existing mines, BHP had “already proven itself willing to return more than the 50-percent of earnings its dividend policy dictates, returns to shareholders could benefit as well”.
Goldman Sachs, however, reaffirmed BHP as a ‘sell’ yesterday, valuing the shares at 1,075p. Morgan Stanley, which is ‘overweight’ on the blue-chip miner, meanwhile boosted its price target on the stock from 1,050p to 1,410p.