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BHP Billiton: Should We Expect More Value after Fiscal 2017 Results?

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BHP Billiton: Should We Expect More Value after Fiscal 2017 Results? PART 1 OF 10

BHP Billiton Missed Estimates despite Surge in Earnings

Results missed expectations

BHP Billiton (BHP) released its fiscal 2017 results on August 21, 2017. That day, it held its conference call to discuss the results. BHP’s fiscal year ended on June 30, 2017. Despite posting a fivefold increase in underlying profits at $6.7 billion, it missed analysts’ estimate of $7.4 billion. Its revenues also rose an impressive 23.0% YoY (year-over-year) to $38.2 billion but still missed the consensus expectation of $38.4 billion.

BHP Billiton Missed Estimates despite Surge in Earnings

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The rises in revenues and earnings can mostly be attributed to the rise in commodity prices (COMT). The company also tripled its dividend per share to $0.43.

Peer results

Vale SA (VALE) reported its 2Q17 results on July 27, 2017. It reported a substantial fall in earnings from $1.1 billion in 2Q16 to $16.0 million in 2Q17 due to asset write-downs, lower commodity prices, and financial losses. Its adjusted EPS (earnings per share), however, beat analysts’ estimate by $0.01, coming in at $0.18.

Rio Tinto (RIO) released its earnings for the first half of 2017 on August 2, 2017. Despite achieving 152.0% higher underlying earnings YoY, it missed market expectations.

Freeport-McMoran’s (FCX) earnings also fell slightly short of analysts’ expectations in 2Q17.

Analysis of results

In this series, we’ll analyze BHP’s earnings for fiscal 2017. We’ll also take a look at the company’s volatile commodity price (COMT) environment.

The company classified its US onshore shale assets as non-core and is looking to exit this business. In the next part of the series, we’ll look at this development in more detail.

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