BHP share price rises 1.42% following June activities report

Following the release of BHP’s fourth quarter activities report, analysts from the Royal Bank of Canada continue to prefer BHP shares over Rio Tinto.

BHP Source: Bloomberg

BHP Billiton Ltd, the A$199 billion global mining company released its Q4 activities report this morning.

Investors responded positively to the report, with BHP’s share price rising as much as 1.42% during morning trade.

Here’s everything you need to know from BHP’s Q4 activities report:

Production increases across the board

Between March and June, BHP saw some healthy increases in production across nickel, coal and iron ore. Overall, production rose 11% in the June quarter.

Nickel production rose 49% from March to June, as output from the Kalgoorlie smelter ramped up following the completion of vital repairs.

Improved mining performance also saw metallurgical coal production increase 20%, with the June quarter witnessing significantly better weather conditions.

Iron ore production was up 12%, as BHP’s Western Australian Iron Ore (WAIO) processing hub returned to full capacity after being negatively impacted by cyclones in March.

Lastly, petroleum and copper production posted more modest increases in the June quarter, up 3% and 6% respectively.

BHP's major projects tracking well

As it stands, the company has five major projects under development, spanning petroleum, copper, iron ore and potash.

Promising progress was also made on the company’s North West Shelf Greater Western Flank-B project, which managed to achieve first production ‘ahead of schedule and under budget’.

Finally, a focus on expanding copper operations was also highlighted in this morning’s Q4 activity report, with greenfield expansion across 'Chile, Ecuador, Peru, Canada, South Australia and the South-West United States' a highlight.

Long-term value in focus

Speaking of the company’s yearly performance, BHP’s CEO, Andrew Mackenzie, noted that:

‘We finished the 2019 financial year with an 11 per cent increase in quarterly production, driven by strong operational performances across our portfolio, including annual production records at a number of our petroleum, copper, iron ore and metallurgical coal operations.’

BHP's CEO also pointed out that strong company performance puts us in a position to deliver higher volumes in the 2020 financial year. BHP’s suite of attractive options, together with our culture and transformation programs, will grow returns and create long-term financial and social value.”

Already BHP has delivered good returns to investors this year, with the company's share price rising 22.2% YTD.

Analysts weigh in on BHP’s Q4 update

It was not just BHP’s leadership that was happy with the company’s fourth quarter performance. A research note from the Royal Bank of Canada released this morning also painted a positive picture of the June quarter results.

According to the research note, BHP Billiton Ltd mildly exceeded most of the bank's production estimates, while also meeting production estimates across petroleum, copper and iron ore.

Maybe most positively, the bank noted that ‘we continue to prefer BHP over its key Australian peer RIO given relative valuation.’ Additionally, ‘BHP’s more diverse portfolio mitigates the potential impact of falling iron ore prices,’ said the bank.

Lastly, the Royal Bank of Canada flagged the potential of a special $0.60 per share dividend following BHP's full year results in August.

The bank currently has a price target of A$43.00 on BHP's shares.


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