Record financial results including Underlying EBITDA up 51% to US$37.1 billion, Underlying EBIT up 62% to US$32.0 billion and Attributable profit (excluding exceptional items) up 74% to US$21.7 billion.
Strong margins and returns illustrated by increase in Underlying EBIT margin to 47% and Underlying return on capital to 39%.
Record production across four commodities and ten operations.
Record operating cash flow of US$30.1 billion and gearing of 9% confirms capacity to comfortably fund the Group’s US$15.1 billion acquisition of Petrohawk Energy Corporation and extensive organic growth program.
Completion of expanded US$10 billion capital management program highlights commitment to maintain an appropriate capital structure through all points of the economic cycle.
22% rebasing of final dividend for full year dividend payout of 101 US cents per share.
Read full results.
While share and commodity markets gyrate from optimism to pessimism and back, BHP has no such longer-term qualms. BHP has a ‘through-cycles’ approach to investment. In 2008 and 2009 when all its rivals were carving into their spending, BHP invested $US20 billion. By continuing to pour capital into expanding its operations during the worst of the GFC, BHP leveraged its ability to capitalise on the return to more normal settings.
The nature of much of its investment, and the fact that a significant slab of it occurred during the immediate aftermath of the GFC before cost pressures really flared, means it remains at the lower end of the cost curve.
If China and India continue to sail along at high single-digit growth rates, BHP will continue to deliver dazzling profit and growth numbers because the rising floor of costs under the sector will ensure commodity prices have to remain high.
If, however, China were to slow and prices were to fall back, a lot of new production and potential production from BHP's competitors would quickly become sub-economic or worse, remove the higher-cost supply from the market.
Either way, BHP is in a winning position.
