Mining giant BHP Billiton is expected to have arrested a two year earnings slide in the past six months, and shareholders may be rewarded with an increased dividend.
However it is unlikely to match fellow miner Rio Tinto’s bumper 15 per cent dividend lift, or its degree of costs and spending cuts.
Analysts expect BHP to post on Tuesday an underlying profit of $US7.13 billion ($A7.89 billion) for the first half of the 2013/14 financial year.
That would be up 20 per cent on underlying profit in the same period a year earlier, and up five per cent on the six months to June 30, 2013.
BHP is also expected to lift its interim dividend by nine per cent to 62 cents per share.
A major part of BHP’s appeal to investors is that it is – in the company’s own language – the world’s largest diversified resources company, mitigating the risks of downturns in a commodity better than its rivals can.
However an unexpectedly strong iron ore price in the last year means the key steelmaking ingredient will again dominate its earnings, with Deutsche Bank analyst Paul Young tipping a 30 per cent lift.
BHP chief executive Andrew Mr Mackenzie’s comments on the outlook for iron ore prices will be closely watched, after Rio chief Sam Walsh last week rejected predictions of large falls in the iron ore price.
Weaker than expected petroleum production in the last three months of calendar 2013 is expected to keep profit in that closely watched division of BHP’s business flat, according to Mr Young, and RBC Capital Markets.
RBC said BHP’s report would be closely watched for examples of operating cost savings – following last year’s $US2.7 billion reduction in cost – as well as capital expenditure reductions, an update on its costly potash project in Canada and potential sales.
BHP has not identified specific cost targets like Rio, but has targetted a 25 per cent reduction in its capital expenditure budget to $US16 billion this financial year.
The company’s shares gained 31 cents to $38.02 on Monday, but are down 2.5 per cent in the last year.
