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BHP Billiton : Q3 production
BHP Billiton’s third quarter production and the nine month production to March 2005 were up on most of its core products. However, production was below the previous quarter.
Petroleum products (21.4% of operating profit) production was 4% lower than the comparative period at 28.5 mboe and 3% lower than the previous quarter. Oil and condensate production was lower due to natural field decline, higher downtime and a sale of assets in Bolivia (in February 2004), which was partially offset by newer production. Natural gas production was up from the comparative due to newer production but downtime and natural field decline in some some fields meant that production was below the previous quarter.
Carbon steel materials (Iron ore, coal, manganese ore and alloys) generated 23.7% of the operating profit in the first half. All the above mentioned metals production was up from the comparative period as was the nine months production, but was below the previous quarter. Iron ore production was 14% up from the comparative period as BHP Billiton increased capacity.
Base metals (Copper, Lead, Zinc and Gold & Silver according to Billiton classification) generated 24.5% of the operating profit in the first half, with copper driving operating profit in the first half. Copper production was 4% higher than the corresponding period but 6% lower than the previous quarter. Head grades and mill throughput was higher than the corresponding period, but below the previous quarter which explains the difference in production.
Alumina and aluminium production was 3% higher and flat respectively from the corresponding period. Alumina production was 5% higher than the previous quarter while aluminium production was 2% below the previous quarter. In the first half, aluminium generated 10.8% of the operating profit.
BHP Billiton’s shares trade at a prospective PE of 11.7× and has a 2.4% yield. The acquisition of Australian miner WMC Resources (yet to be finalised) for US$ 7.3bn will increases BHP Billiton’s exposure to nickel and copper and provides an entry to uranium.
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