BHP Billiton Sets A 12-Year Record

Published in Company Comment on 18 July 2012

Mega-miner BHP Billiton (LSE: BLT) reports a 12th consecutive year of record iron ore production.

BHP Billiton (LSE: BLT) updated the market on its latest production figures today with a pretty strong performance across the board. The highlight was iron ore, which accounts for about half of the mining giant's profit. Here, BHP Billiton reported record production for the twelfth consecutive year.

Iron ore production came to 159.5m tonnes in total, up an impressive 19% on last year's performance, thanks to a new processing facility and investment in rail and sea distribution facilities. A further 5% production increase is expected in the coming year but, like its rival Rio Tinto (LSE: RIO), BHP Billiton has big plans to expand its production of iron ore over the long term.

BHP's second largest division is now oil and gas, where it has recently bulked up by spending $20bn on acquiring Petrohawk and some assets from Chesapeake Energy (NYSE: CHK.US). These acquisitions led to a 40% overall increase in production levels, although worries persist about the low level of natural gas prices in the US, given the huge investment BHP has made in this area.

BHP's third and fourth largest divisions are base metals and coal. Although, there was a small decrease in base metal production, there was a similar-sized increase in coal.

There was little to surprise investors overall in this release, so BHP shares were largely unchanged this morning, slipping just 0.5% to 1,775p.

Thanks to lower commodity prices, BHP is expected to report a drop in profits when it releases its full-year results on 22 August. Post tax earnings are forecast to drop from $23bn last year to around $18bn, putting the shares on a price-to-earnings ratio of around 8.5 times, with a dividend yield project to be around 4%.

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> Stuart does not own any of the shares listed above.

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