10 things you need to know from BHP Billiton Limited’s production results

Mining heavyweight BHP Billiton Limited (ASX: BHP) has today released its operational review for the 2014 fiscal year.

And boy was it impressive…

Since the report was released this morning, the stock has climbed 64c or 1.7% and has helped boost the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) to a fresh multi-year high of 5,598.2 points. Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have also jumped on the news.

Here are 10 things you need to know from BHP’s operational review…

1)  BHP achieved an annual production record of iron ore. Volumes increased to 225 million tonnes, smashing its previous guidance of just 217 million tonnes and topping the prior 12 months by 20%.

2)  This result was bolstered by improvements to productivity, good weather conditions and an earlier than expected opening of its Jimblebar mine.

3)  The price BHP received for iron ore fell to an average US$103 a tonne for the year, compared to US$110 a tonne in the prior year. It has fallen even lower in the last six months to US$96.

4)  The miner now expects to produce 245 million tonnes from the Pilbara in the 2015 financial year.

5)  Copper production hit the planned 1.7 million tonnes. BHP expects to improve that by 5% in 2015 to 1.8 million tonnes.

6)  Petroleum production increased by 4% to 246 million tonnes, while there was an 18% increase in liquids volumes. Petroleum production is tipped to jump by 5% in the 2015 financial year

7)  Metallurgical coal production exceeded full-year guidance, climbing 20% to a record 45 million tonnes. On the other hand, thermal coal, which is used to generate electricity, remained virtually flat.

8)  The group reported that its Jansen Potash project is now 30% complete and on budget. In comparison, it was 25% complete when the group reported three months ago.

9)  Earnings are expected to be hit by between US$900 million and US$1.3 billion as a result of impairment charges, mine site rehabilitation costs and redundancy payments.

10) All-in-all, BHP achieved record production in four commodities and said its total output increased by 9% for the year.

BHP Billiton’s latest report highlights that the company is driving on all cylinders. Although earnings will be impacted by the declining iron ore and coal prices, it will be, at least in part, counteracted by the miner’s improved production rates.

An even better bet than BHP Billiton

As BHP continues to focus on improving its productivity and reducing its costs substantially, it is becoming an increasingly attractive investment prospect.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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