Superior earnings led by operating margin expansion, however market consensus building in modest numbers

BHP Billiton is an international resources company. The Company's chief business lines are mineral exploration and production, including coal, iron ore, ferroalloys, gold, titanium, nickel and copper concentrate, along with petroleum exploration, production, and refining.

Marginal revenue growth, however expansion in margins led to better net income growth

BHP Billiton reported marginal revenue growth of 2% for the fiscal year 2014 (June ending) with revenues coming in at $67.2 billion. However, the company posted good set of numbers at the operating income front with 22% growth in fiscal year 2014 predominantly led by margin expansion. Operating income margin for the fiscal year 2014 came in at 35% versus 29% in fiscal year 2013.

Expansion in margins coupled with lower effective tax ratio and lower net interest payment fairly permeated down to the net income level witnessing a growth of 27% in fiscal year 2014.

Remarkable growth in EPS; consistent healthy dividend pay-outs

EPS for the fiscal year 2014 (June 2014) stood at $2.60, a growth of 27% on a year-on-year basis, akin to net income growth. BHP Billiton has been satisfying its shareholders with dividends on regular basis. The company has paid dividends of $1.21 per share in fiscal year 2014 as compared to $1.16 per share in fiscal year 2013. Although dividend per share as a proportion of earnings per share marginally declined, it is still at healthy levels of 47%.

Market consensus

Going forward, market consensus factors in a modest growth in revenues and net income for BHP Billiton, in line with the revenue growth exhibited in fiscal year 2014. Company is likely to further increase its dividend pay-out in the future. The table below indicates market anticipations for BHP Billiton in terms of its financial performance:


Movement towards healthy capital structure with considerable reduction in debts

Company’s long term debt has remained more or less at similar levels as of fiscal year end 2014 at $31.7 billion with cash and equivalents of $10.9 billion. Overall on the leverage front, the company’s Long-Term Debt/Equity ratio is at comfortable levels of 0.35x as of fiscal year 2014 end. Capex for the fiscal year 2014 stood at $8.6 billion as compared to $11.6bn for the fiscal year 2013.

Upcoming events

The Company is expected to declare operational review for September 2014 on 22 October 2014.

Major shareholders

Following are 3 major shareholders of company:

  • BlackRock Investment Management (UK) Ltd. 9.99% holding with 210.98m shares
  • Aberdeen Asset Managers Ltd. 6.33% holding with 133.64m shares
  • Public Investment Corporation Limited. 3.47% holding with 73.33m shares

    Significant change in shareholding

    Following are the major shareholding transactions that took place recently:

  • Aberdeen Asset Managers Ltd. buying 108.01 million shares
  • Northern Cross LLC selling 19.91 million shares
  • Public Investment Corporation Limited selling 13.80 million shares
  • Dodge & Cox selling 12.28 million shares

    Volatile stock price graph of Billiton primarily due to fluctuating net income over the years