BHP Billiton 1H16 Earnings Impress; Revenues Decline Y/Y

Mining giant BHP Billiton Limited (BHP – Analyst Report) reported mixed financial results for first-half fiscal 2016, ended Dec 31 2015.

Earnings per American Depository Share (“ADS”) from continuing operations came in at $2.12, up 44.2% from $1.47 per ADS earned a year ago.

Revenues: Revenues for first-half fiscal 2016 totaled $15.7 billion, down from $24.9 billion recorded in the year-ago comparable period. The decline was led by a significant fall in market price of the company’s major commodities.

Margin: Underlying earnings before interest, taxes, depreciation, and amortization (“EBITDA”) were recorded at $6 billion for first-half fiscal 2016, down 54% year over year.

Balance Sheet: Cash and cash equivalents as of Dec 31, 2015 were $10.6 billion, up from $6.8 billion as of Dec 31, 2014. Interest-bearing liabilities totaled $4.1 billion, up from $3.2 billion as on Dec 31, 2014.

Cash Flow: Net operating cash flow declined 45.3% year over year to $2.3 billion for half-year fiscal 2016. Capital expenditure was $4 billion, down from $6.4 billion incurred in the year-ago comparable period.

In the reported period, the company paid dividends worth $3.3 billion compared with $3.2 billion paid in the half year ended-2014.

Outlook: BHP Billiton expects economic growth in developed countries such as the U.S. and U.K. to support its commercials in the near future. However, the same might be adversely affected by persistent sluggish economic conditions in nations like China, Brazil and Russia.

At the same time, certain external headwinds are anticipated to hurt the company’s performance in the second half of the current fiscal year. Nevertheless, backed by stronger productivity and benefits of the proposed demerger, the company continues to uphold a positive outlook for fiscal 2016.

Stocks to Consider

BHP Billiton presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include AK Steel Holding Corporation (AKS – Analyst Report), American Vanguard Corp. (AVD – Snapshot Report) and Capstone Mining Corp. (CSFFF – Snapshot Report). While Capstone Mining sports a Zacks Rank #1 (Strong Buy), both AK Steel Holding and American Vanguard hold a Zacks Rank #2 (Buy).