BHP Billiton share price subdued as miner’s iron ore output falls short of estimates

Shares in BHP Billiton (LON:BLT) have slipped marginally into the red in London this morning, as the Anglo-Australian miner’s first-quarter iron ore output missed forecasts. The update comes at a sensitive time for the company with an activist investor pressing ahead with its campaign to force a radical shake-up of the group.

As of 10:24 BST, BHP Billiton’s share price had lost 0.25 percent to 1,411.50p, underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.28 percent higher at 7,537.55 points. The group’s shares have added more than 16 percent to their value over the past year, and are up by some eight percent in the year-to-date.

Production update

BHP Billiton announced in a statement this morning that its iron ore output had declined by three percent to 56 metric tonnes in the quarter ended September 30, with the impact of planned maintenance and lower opening stockpile levels, following the fire at the Mt Whaleback screening plant offsetting improved mine productivity and record volumes at the Jimblebar operation. The result came short of the 58.8 million tonnes median estimate among four analysts surveyed by Bloomberg.

The group’s petroleum production meanwhile slipped eight percent to 50 million barrels of oil equivalent due to natural field decline and the impact of Hurricane Harvey on US petroleum assets.

BHP Billiton’s chief executive Andrew Mackenzie, however, reassured investors that the company was on track to deliver seven per cent volume growth in the 2018 financial year.

The miner’s update came after news emerged earlier this month that representatives from activist investor Elliott Management had met with major BHP investors based in London, South Africa and Australia in the last month, to lay out its arguments for an overhaul of the miner.

Analysts on BHP Billiton

Deutsche Bank, which has a ‘buy’ rating on BHP, boosted its price target on the shares from 1,600p to 1,650p last week, while Macquarie reaffirmed the Anglo-Australian miner as an ‘outperform,’ valuing the shares at 1,600p. According to MarketBeat, the FTSE 100 group currently has a consensus ‘hold’ rating and an average price target of 1,324.05p. 

As of 10:46 BST, Wednesday, 18 October, BHP Billiton plc share price is 1,411.50p.