Is being a boring cash cow going to be enough for BHP?: – by Clyde Russell (Reuters/Daily Mail – August 17, 2016)

LAUNCESTON, Australia, Aug 17 (Reuters) – While a record loss is certain to grab media headlines, the real story about BHP Billiton is far more sanguine as the company tries to prove that boring is better.

The $6.4 billion loss for the year ended June 30 was largely in line with expectations, and the main contributors of provisions for the dam disaster at the Samarco iron ore mine in Brazil and the writedown of the U.S. shale gas business had been flagged and well understood by the market.

The $1.2 billion in underlying profit was largely the result of the rout in commodity prices, and stands in stark contrast to the $21.7 billion in underlying profit for the year to June 2011, which was both the peak of BHP’s earnings and commodity prices.

Andrew Mackenzie, the chief executive of the world’s biggest mining company, was suitably cautious in his comments about the outlook for commodity prices, going only so far as to say there is now a sense that they are no longer in “free fall.”

He was also keen to talk up the productivity gains already achieved and those still to come, as well as the expected doubling of free cash flow in the current 2016-17 year to $7 billion.

Overall, Mackenzie and his team most probably did the best job possible of presenting the company’s worst results, and furthermore held out the strong likelihood of a significantly better performance in the current year.

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