BHP Billiton Ltd., the world's biggest mining company, is planning to return $10 billion ($A13 billion) to its shareholders through the buyback of shares after the profit touched a record owing to higher metal prices.
Marking the biggest gain in more than four years, the Company’s shares rose 5.9 percent in Australia. The first half profit leaped 41 per cent to $6.2 billion ($A8 billion) from $4.36 billion a year ago. It fell quite in line with the market expectations. Sales went up 22 percent to $22 billion.
The buyback move, which has come as a surprise to the market in its scale reflects BHP’s faith in the commodities boom.
"It is pretty amazing, and basically what they are saying is they are confident of generating an awful lot of cash over the next 18 months, and they are happy to give it back to shareholders," said Mark Daniels, director of equities with Aberdeen Asset Management.
BHP shares rose 4.6 per cent to A$27.84 at the Australian Stock Exchange but they remained down from their high of A$32 in May when metal prices were at their peak.
Along with all these profits came the news of long time chief executive Chip Goodyear preparing to retire at the end of the year. After spending 5 years as the CEO of the Australian miner and 4 years before that, Goodyear, 49, said that his decision to retire was partly personal and partly professional. "I generally stay in an organization for something like eight to nine years and that's good for personal renewal and for corporate renewal," he said.
A recent speculation out of the London markets suggests that BHP could sell its prized Gulf of Mexico oil and gas assets to fund an inclination towards Anglo American or Rio Tinto.
Although Goodyear did not make any direct comment on it, he seemed to dismiss the idea of exiting the Gulf of Mexico. "These are great assets. They fit well within the family. I'd expect that you will see us continue to prosecute that opportunity in the years and months ahead," he said.
Counting $10 billion this time, Goodyear has returned $17 billion to shareholders since August 2004, the company said.
Goodyear was considered to prove helpful in sorting out a culture clash between BHP and Billiton, and for bringing in more financial discipline. "I'm a little bit surprised with the impending resignation of Goodyear, but the management team is obviously quite deep," said Adam Dixon, a portfolio manager with Ausbil Dexia Ltd.
Goodyear seemed positive about the future as he said, “We continue to feel extremely good about what we see in the economic environment. Our future growth has been well-managed in terms of the capital we spent on that. We continue to grow that capital spending.”
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