(By David) BHP Billiton is scheduled to report their first half 2010 earnings results on Wednesday, February 10, 2010. BHP Billiton has one of the mining sector's strongest balance sheets. Investors will look to see how it plans to use this mussel through project spending, higher dividends, a share buyback or M&A. On the back of a strong Chinese demand, BHP Billiton reported a rapid rise in production of essential commodities. For three months up to December 31, 2009, BHP's production of iron ore hiked by 11% to 32.45 million tons, as compared to the previous year's same quarter. The figures were reported by the miner in January.
BHP Billiton Limited, together with its subsidiaries, operates as a diversified natural resources company in Australia, the Americas, and southern Africa. The company explores for and produces crude petroleum oil and liquefied natural gas; mines bauxite, refines bauxite into alumina, and smelts alumina into aluminum metal; mines various base metals, including copper, silver, lead, zinc, and uranium; explores and produces diamonds, titanium minerals, and potash; supplies nickel to the stainless steel industry; and explores iron, manganese, metallurgical coal, and thermal or steaming coal.
For the 6 months ending June 30, 2009 BHP reported Diluted EPS Excluding Extraordinary Items of 58 cents on 20.4 billion dollars of revenue. Analyst estimates mean is 3.39 for. The last 3 year EPS growth rate is 16%, but in contrast the last 3 quarters EPS growth rate is -8%. Over the past 30 days the change in estimates has moved from 3.06 to 3.39, which reflect the recent production surge in mining activity.
The recent surge in production of iron ore has been met by some caution from BHP management. The company warned that caution has to be maintained as far the short-term outlook of its commodities goes, mainly because of the uncertainties that currently loom over the speed of economic recovery in developed nations goes. Also, the outlook depends on China's moves to constrain liquidity, which has seen an immediate effect on current short term commodity prices.
BHP Billiton Limited announced that it has entered into a definitive agreement with Athabasca Potash Inc. (API) to acquire all of the issued and outstanding common shares of API at a price of CAD8.35 cash per common share. The total equity value of the transaction is approximately CAD341 million (USD320 million) on a fully diluted basis. API is a Toronto Stock Exchange listed, junior potash company that owns the Burr Project and various potash exploration properties in Saskatchewan, Canada. Meanwhile, regulators are reviewing BHP's proposed iron ore joint venture with Rio Tinto, and analysts await any comments on the process from the miners. BHP is also waiting to see if Australia introduces a mining tax which would cut into earnings.
Currently, the stock is trading at $72.10 compared to 52 week range of $33.09 and $82.74. In the last 12 months the share price saw an appreciation of 86.74% and has the earnings power to sustain double digit growth rates. The recent selloff in BHP stock in the middle of January, has coincided with a selloff in the overall equity and commodity markets and the tightening of liquidity by the Chinese PBOC (central bank).
