BHP Billiton share price rises even as group posts record loss

Shares in BHP Billiton (LON:BLT) have climbed into positive territory in London this morning, outperforming the broader market, as the blue-chip miner said that it expects its free cash flow to more than double this year. The group, however, posted its first loss since 2001, pressured by weak commodity prices and last year’s Samarco dam disaster in Brazil.

As of 08:38 BST, BHP Billiton’s share price had added 0.82 percent to stand at 1,051.00p, outperforming the blue-chip FTSE 100 index which has slipped into negative territory and is currently 0.21 percent worse off at 6,926.71 points. The group’s shares have lost nearly nine percent of their value over the past year, but have recovered more than 38 percent in the year-to-date.
BHP Billiton announced in a statement this morning that it had slumped to a $6.24-billion loss for the 12 months ended June 30, 2016, as compared with a $8.67-billion profit a year ago, marking the mining giant’s first reported loss since the 2001 merger of Australia’s BHP and Anglo-Dutch Billiton. The group’s free cash flow meanwhile came in at $3.4 billion, covering a final dividend of 14 US cents per share.
“The last 12 months have been challenging for both BHP Billiton and the resources industry,” the group’s chief executive Andrew Mackenzie said in the statement, adding, however, that the group expected to deliver another $1.8 billion of productivity gains, and more than $7 billion of free cash flow based on current spot prices and a forecast reduction in net debt.
Peter O’Connor, metals & mining analyst at Shaw and Partners in Sydney, told the Financial Times that the 2016 financial year – and specifically the first half – will be seen as the earnings nadir for the BHP, with the prior low being in 1999 (on an underlying basis). He added that rising commodity prices should help, pointing out that prices in FY17 are already tracking 15 percent higher than in FY16.
As of 09:01 BST, Tuesday, 16 August, BHP Billiton plc share price is 1,045.00p.