BHP Billiton has announced strong financial results for the December 2013 half year, with underlying EBIT (earnings before interest and tax) increasing by 15% to US$ 12.4 billion, while underlying attributable profit increased by 31% to US$ 7.8 billion.
Company CEO, Andrew Mackenzie, explained that the strong performance was driven by a substantial improvement in productivity and additional volume from BHP Billiton’s low-risk, largely brownfield investment program.
Mackenzie commented: “The commitment we made 18 months ago to deliver more tons and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results.
“Annualised productivity led volume and cost efficiencies totalling US$ 4.9 billion are now embedded and this is expected to increase to US$ 5.5 billion by the end of the 2014 financial year.
“This sustainable increase in productivity supported a 9% increase in the group’s underlying EBIT margin to 38% and a strong improvement in the group’s underlying return on capital to 22%.
“The group’s opportunity rich portfolio remains a key point of differentiation. By maintaining strict financial discipline and increasing internal competition for capital we intend to further differentiate ourselves by creating a more capital efficient organisation.
“On this basis, we believe an average rate of return of greater than 20% is achievable for our portfolio of major development options,” Mackenzie added.
Strong free cash flow
BHP Billiton’s interim dividend of 59 cents per share was unchanged from last year’s final dividend, consistent with recent practice. With strong free cash flow projected, net debt of US$ 27.1 billion is expected to approach US$ 25 billion by the end of the 2014 financial year.
Health and safety
Commenting on company performance and safety, Mackenzie added: “I want to acknowledge the hard work of BHP Billiton employees and their contribution to these strong results. Together we are improving the productivity and competitiveness of the company and the countries in which we operate.
“I also want to thank our people for their unwavering commitment to health and safety.
“We are pleased to report improved safety performance in the first half, reducing our Total Recordable Injury Frequency to a record low of 4.4 per million hours worked.”
Adapted from press release by Katie Woodward
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