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BHP Billiton: City broker awaits project news amid falling prices and rising costs

With BHP Billiton’s (LON:BLT) full year results likely to show falling prices and rising costs, just like its mining peers, analysts at RBC Capital says it is looking for signs whether the FTSE’s largest miner may drop shelve new projects.

“Having already addressed the market’s concerns over writedowns of its shale business, focus will now be turned to BHP’s capex plans and whether any of its large projects will be deferred in light of weak market conditions,” RBC analyst Des Kilalea said in a note.

In particular he says he's looking for comments about ‘mega projects’ in Billiton’s pipeline like the Outer Harbour, Olympic Dam and Jansen Potash, as well as plans for a disposal of Billiton’s diamond business.

That said, Kilalea reckons Billiton continues to offer an attractive yield and diversification in a tough market. As such the analyst repeated an ‘outperform’ rating and a £23.00 price target for the heavyweight mining stock.

RBC is forecasting revenues of US$70.8 billion for the twelve month period, with earnings of US$32.6 billion – both forecasts are slightly below consensus.

The broker expects Billiton’s iron ore business to have improved on last year, while base metals and coal businesses are expected to have been weaker.

Billiton’s results are due for release on Wednesday 22 August.

 

Jamie Ashcroft


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