BHP Billiton

By Dan Stratful

Monday 13th February 2012

BHP Billiton (ASX: BHP) has reported its first half result and analysts retain their buy recommendation on the stock despite a 5.5% drop in profits and the result coming in slightly below analyst expectations.

For the six months to 31 December 2011 BHP reported revenue up 9.7% to US$37.5 billion and a net profit of US$9.9 billion, down 5.5% on the previous corresponding period. Underlying EBITDA was up 8% to US$18.7 billion.

BHP completed the acquisition of Petrohawk Energy Corporation during the first half which resulted in gearing increasing to 25%. Chief Executive Marius Kloppers reported that the Miner was on the look out for further acquisitions and further consolidation in the mining sector is expected in the years ahead.

Record Western Australia Iron Ore production and stronger bulk commodity and petroleum product prices were the major catalysts for BHP’s 6% increase in underlying first half EBIT.

Prices for many of BHP Billiton’s products declined during the latter part of the 2011 calendar year as concerns surrounding broader European liquidity saw a deterioration in commodities demand. BHP expects volatility in commodity markets to persist as the European sovereign debt crisis and general weakness in the manufacturing and construction sectors across key markets are expected to weigh on customer behavior and sentiment.

The merger proposal between Glencore and Xstrata has been positive for mining stocks in recent days as the market speculates that further M&A activity will occur. Fortesque Metal’s share price has been buoyant after a mystery buyer snapped up its stock last week.

Status: GROWTH BUY

BHP’s shares today traded at $36.45

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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