Although mining heavyweight BHP Billiton Limited (ASX: BHP) today announced record volumes of coal and iron ore for the December 2013 half year, shareholders were left disappointed as iron ore production narrowly missed market expectations.
The market had been anticipating 49.4 million tonnes for the December quarter, but the miner only achieved 48.9 million tonnes (which was up 16% on the year). While still a strong effort, investors had been hoping for a stronger-than-anticipated result which may have led to upgraded full-year production guidance, as was delivered by rival Rio Tinto Limited (ASX: RIO) when they reported last week. Instead, BHP maintained its guidance of 212 million metric tonnes for the 2014 financial year due to “the general uncertainty that exists as we enter the wet season.”
A 6% increase in copper production to 843,000 tonnes was achieved compared to the prior corresponding period, while petroleum liquids production also increased by 9% to 50 million barrels of oil equivalent, underpinned by a 72% increase at Onshore US. Full-year production guidance was also maintained for their petroleum, copper and coal businesses.
Pleasingly, BHP continued to recognise improvements in its productivity levels throughout the period, which the company said was particularly evident in its Queensland Coal business, running at an annualised rate of 68 million tonnes for the quarter.
Here are some of the other highlights from Wednesday’s half-year operational review:
- Western Australia Iron Ore (WAIO) achieved record production of 108 million tonnes (100% basis) – which was bolstered by the ahead-of-schedule first production from the Jimblebar mine
- Queensland Coal achieved record production of 68 million tonnes
- Two major projects delivered first production in the December 2013 quarter – all other projects are on schedule and budget
- The miner’s share of capital and exploration expenditure for financial-year 2014 is expected to be US$16.1 billion
- Strong momentum for productivity agenda going into the second half of the financial year
Following the news, BHP’s shares fell 1.8%, while fellow miners Rio Tinto and Fortescue Metals Group Limited (ASX: FMG) are down 1.7% and 2.7% respectively.
Although BHP narrowly missed its production target for iron ore, the miner continues to improve its position moving forward by cutting costs, improving productivity and simplifying its balance sheet by divesting non-core assets. The miner also maintains much more diversified operations than its peers, making it a much safer bet going forward.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
- Coronavirus (COVID-19): 6 charts every Australian needs to see – April 6, 2020 1:46pm
- Innovation through crisis – April 2, 2020 11:48am
- Coronavirus (Covid-19): Why Is Italy’s Fatality Rate So Bad? – March 26, 2020 3:39pm