Mining heavyweight BHP Billiton Limited's (ASX: BHP) interim results have been well received by the market which has pushed the stock 2.5% higher in mid-afternoon trade.
While the stock initially fell into negative territory as investors absorbed its 47.4% decline in net profit for the period, it has risen strongly since, reaching an intraday high of $33.10 before settling back at $32.94.
Source: Yahoo Finance
The market had expected a significant fall in profits as a result of crashing commodity prices, which have also hurt rivals Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). In its report this morning, BHP Billiton confirmed that the average price realised for iron ore had fallen 38% during the period to just US$70 a tonne, which significantly impacted profitability.
However, the miner also heavily reduced overall capital and exploration expenditure and made considerable productivity gains which helped to offset some of that pricing pressure. BHP Billiton still managed to generate US$4.1 billion in free cash flow and increased its interim dividend by 5% to US 62 cents per share. This is likely one of the key reasons the stock has risen so strongly today.
