Company is the worlds largest diversified resources group. It has seven divisions: Petroleum, Aluminium, Base Metals, Carbon Steel materials, Diamonds and speciality products, Energy coal and Stainless steel materials.

            Red = 25 day moving average.           Green = 200 day moving average.

SALES PER ACTIVITY (Data as of 30/06/2006)

Carbon steel:   28%
Oil:                18%
Aluminum:       15%
Basic metals:   15%
Coal:               9%
Stainless steel: 9%
:                    3%
Diamonds,
minerals, etc:   3%

Cazenove note today:
"We believe the Samarco tailings dam failure will prove to be the straw that breaks the camel’s back on BHP’s progressive dividend. At spot, assuming $500m costs related to Samarco and aggregate FY’16-17E capex $2bn below guidance, we estimate a ~$8bn shortfall to comply with A- credit metrics by the end of CY’17E. With the risk of further downside to base metals, we believe pressure will grow on BHP’s Board and we now forecast a 50% cut to the progressive dividend at FY’16 results. Against that backdrop, we do not believe 8% YTD underperformance vs RIO and +30-35% vs AAL/GLEN adequately reflects the risk investors, particularly those with an income focus, and we downgrade to Underweight with a revised Dec’16 PT of £7.50/sh.
 Material cash/capital shortfall: On spot prices and assuming no change to the US$6.6bn pa progressive dividend we estimate BHP faces a $16-20bn capital shortfall to sustain its A+ credit rating and a cumulative ~$9bn deficit of FCF vs dividend commitments for CY'16-17E. Even assuming management is willing to tolerate an A- rating, which they have indicated is below their definition of “solid A”, we estimate an $8bn capital shortfall, despite our capex forecast sitting $2bn below guidance for FY’16-17E.
 Factoring in a 50% dividend cut: In that context, with downside risk to copper prices and with management commentary increasingly equivocal on the trade-off between capital returns and investment in growth, we believe BHP will ultimately rebase the dividend 50% lower (to ~US$3.3bn pa) at FY’16 results next August. In combination with further reductions in working capital, opex and capex, this should allow the company to manage its balance sheet effectively, whilst still offering a ~4.5-5.0% yield.
 Removing Samarco: We have removed Samarco from our model. While NPV analysis suggests a likely justification for a restart, we believe the environmental, political and social dimensions mean there is no certainty that Samarco will regain its licence to operate. We make a preliminary estimate of US$0.5bn (BHP share) in rehabilitation/fines over three years.
 Downgrade to UW: We reduce our EPS by 7%/9%, respectively, for FY’16/17E and NPV by 4%, with the company now on spot EV/EBITDAs of ~10.5x, a ~5% premium vs RIO and a base case P/NPV of 0.69x (~25% prem. to diversified peer group). We recalibrate our price target methodology to a blended average of our base-case and spot valuation, which reduces our Dec'16 PT to £7.50/sh (previously £13.00/sh). We cut our recommendation to UW and retain our preference for RIO."

sorry to say, but i fear this goliath still has a long way to fall
underlying commodity prices apart, the cost of the disaster in brazil has yet to be played out

UPDATE: SAMARCO

the tailings are composed of materials that are not hazardous to human health, based on the hazard classification of the material under Brazilian standards

the implication being that international standards could well say otherwise!

Have a look at photo 5 here.

Chart of the week: Odds favour a sharp rally soon

Are you prepared to guarantee that?

StockMarketWire.com
BHP Billiton expects to take a hit of approximately USD4.9 billion post-tax (or approximately USD7.2 billion pre-tax) against the carrying value of its onshore US assets.

This charge will be recognised as an exceptional item in the financial results for the half year ended 31 December. The impairment follows the bi-annual review of the company's asset values and reflects changes to price assumptions, discount rates and development plans which have more than offset substantial productivity improvements.

The impairment will reduce onshore US net operating assets to approximately USD16 billion.

The group said the oil and gas industry had experienced significant volatility and much weaker prices. It says the US gas price remains low as industry-wide productivity improvements have resulted in higher than expected supply at lower cost. BHP Billiton has previously suspended development of its dry gas acreage. The company has now also reduced its medium and long-term gas price assumptions. It adds: "In addition, the oil price has fallen by more than 30 per cent over the last three months following the disruption of OPEC and stronger than anticipated non-OPEC production. Although we expect prices to improve from their current lows, we have reduced our oil price assumptions for the short to medium term. Our long-term price assumptions continue to reflect the market's attractive supply and demand fundamentals." The increased volatility in prices has also increased the discount rates applied by BHP Billiton, which has a significant flow through impact on the Company's assessment of its Onshore US asset value. The group will reduce the number of operated rigs in its Onshore US business from seven to five in the March 2016 quarter. This will comprise three rigs in the Black Hawk and two rigs in the Permian. Beyond this, investment and development plans for the remainder of the 2016 financial year are under review, with a focus on preserving cash flow. The oil and gas industry has recently experienced significant volatility and much weaker prices.

Chief executive Andrew Mackenzie said "Oil and gas markets have been significantly weaker than the industry expected. We responded quickly by dramatically cutting our operating and capital costs, and reducing the number of operated rigs in the Onshore US business from 26 a year ago to five by the end of the current quarter. "While we have made significant progress, the dramatic fall in prices has led to the disappointing write down announced today. However, we remain confident in the long-term outlook and the quality of our acreage. We are well positioned to respond to a recovery."

StockMarketWire.com
BHP Billiton is maintaining its full year production guidance for petroleum, copper and coal.

Guidance at Western Australia Iron Ore (WAIO) is also maintained at 270 Mt (100% basis) as continued productivity is expected to offset one-off operational issues from the December quarter. But total iron ore guidance is reduced by 10 Mt to 237 Mt due to the suspension of production at Samarco following the dam collapse.

It says four major projects under development are tracking to plan. The North West Shelf Greater Western Flank-A petroleum project was completed under budget and ahead of schedule. The Greater Western Flank-B project was approved during the period.

Underlying attributable profit in the December 2015 half year is expected to include additional charges in a range of approximately US$300 million to US$450 million.

Chief executive Andrew Mackenzie said: "Our operated assets continued to perform well over the last six months. The strong performance of our conventional petroleum assets has offset lower shale volumes following a reduction in investment to preserve the value of our acreage in current market conditions. Increased throughput at Escondida helped mitigate the impact of expected grade decline and better productivity supported production at Queensland Coal. These efforts have allowed us to maintain production guidance for Petroleum, Copper, Coal and Western Australia Iron Ore.

"Commodity prices fell substantially in the first half of the 2016 financial year putting pressure on the whole resources sector. We continue to cut costs and remain focused on safely improving our operational performance to enhance the resilience of our business. In this environment, we are also committed to protecting our strong balance sheet so we have the financial flexibility to manage further volatility and take advantage of the expected recovery in copper and oil over the medium term."

Half year results, big loses and big cut in divi http://www.moneyam.com/action/news/showArticle?id=5218077

Jefferies comment today:
"BHP reported 1H FY16 EBITDA that was 11% lower than we had anticipated. More importantly, the company announced a new management structure, capex reductions, planned productivity gains, a new dividend policy, and clear capital allocation priorities. These changes are aimed at freeing up cash and should therefore be a positive for BHP shares. We expect the company to use its financial flexibility to acquire an asset (most likely in copper) in the near term.
Management shakeup: In an effort to simplify and in some ways decentralize its structure, BHP announced that it will now group its mining assets into two segments - Minerals Australia, to be run by Mike Henry, and Minerals Americas, to be run by Danny Malchuk. Global Petroleum will be run by Steve Pastor. BHP President of Iron Ore, Jimmy Wilson, and President of Petroleum, Tim Cutt, are leaving the company. We expect this to all be a relatively seamless transition, and the end result should be further cost cutting as redundant functions throughout BHP are eliminated. Tough times call for tough measures.
More productivity gains and capex reductions: BHP expects to deliver $2.1bn of productivity gains in FY '16. These gains will be partially offset by a $1.5bn negative impact due to lower grades at Escondida. The company has lowered its capex guidance from $8.5bn to $7.0bn for FY16 and from $7.0bn to $5.0bn for FY17. Lower costs and lower capex will give BHP additional financial flexibility, as will its new dividend policy (see below).
An end to the progressive dividend, as expected: BHP has lowered its interim dividend by 74%, from $0.62/sh to $0.16/sh (implies an annualized dividend of $1.7bn and dividend yield of 2.8%). We had expected at least a 50% cut to the dividend. The announced $0.16/sh 1H dividend is covered by FCF. Going forward, BHP's dividend will be based on a payout ratio (rather than a progressive policy), with the dividend equal to a minimum of 50% of Underlying attributable profit. This implies a minimum FY17 dividend of $0.18/sh (1.6% yield) if we assume current spot commodity prices and FX. The new policy will ensure that capital returns from BHP are linked to the cyclicality of the business.
Clear capital allocation priorities: BHP's capital allocation priorities will be to 1) spend maintenance capital, 2) maintain a strong balance sheet, and then 3) pay the new minimum dividend. Excess free cash flow will then be allocated to either debt reduction, additional dividends, share repurchases, growth investment, or M&A. At spot prices, BHP would generate excess free cash flow over the next two years (with average FCF before dividends of more than $4bn per year at current spot commodity prices, on our estimates). We do not expect debt repayments (reported net debt of $25.9bn would be 2.2x annualized 1H FY16 EBITDA of $6.0bn), share buybacks, significant additional dividends, or growth investment (better to buy than build now) to be higher priorities than M&A over this period as compelling opportunities may arise. M&A may be on the near-term agenda: BHP believes that "depressed asset values and falling share prices provide opportunities" for mining companies with financial strength.
The company is most constructive on the outlook for copper and oil. If we assume no change in dividend from 1H FY16 to 2H FY16 and from FY16 to FY17, the company's annual dividend payment would fall by $4.9bn relative to FY15. This reduction combined with the announced capex and opex cuts gives BHP significant financial flexibility to buy an asset. We would not rule out an acquisition of a world class copper asset in the $5bn range, if the opportunity emerges."

Another note from Jefferies:
"Even after yesterday’s carnage, BHP’s share price is above our target as commodity prices have been stronger than expected, sentiment regarding mining has improved, and shorts have covered. While the Chinese demand outlook may be slightly better than it was two months ago and more metals intensive stimulus may be coming, our analysis indicates that most commodity prices will go lower in the near term. We downgrade to Hold.
BHP’s mark-to-market valuation is reasonable: The mining sector is coming off its biggest six week rally in 30+ years, with the FTSE Mining Index up 70% from Jan 20 Mar 7 versus the FTSE All-Share Index up 9% over that period. Commodity prices have also significantly increased, with iron ore up 46%, oil up 9%, and copper up 6% YTD (iron ore, oil and copper account for more than 90% of BHP’s NPV, on our estimates). At current spot commodity prices, BHP is on a FY16E FCF yield of 5.9% and EV/EBITDA of 6.4x and a FY17E FCF yield of 11.1% and EV/EBITDA of 5.2x. If we assume a 50% payout ratio (consistent with guidance), BHP’s FY17E dividend yield at spot would be 3.0%. Based on these valuations, we would buy BHP shares only if we were confident that the recent recovery in commodity prices is sustainable.
Commodity prices to go lower: Based on our analysis, the recent strength in prices of iron ore, copper and other mined commodities will at least partially reverse over the next 3-6 months. In the case of iron ore, supply growth from Roy Hill and a seasonal increase in supply following what has been a period of typical weather-related supply disruptions should pressure the price, especially if demand stays weak. We expect the iron ore price to fall to below $40/t this summer (versus current spot of $64/t). In the case of copper, a wave of supply growth (Cerro Verde, Las Bambas, Buenavista, Sentinel, Grasberg, Bozshakol, Antucoya and others) should more than offset any improvement in demand and lead to lower prices. Based on our commodity price forecasts rather than current, higher spot prices, BHP’s valuation is stretched (FY16E FCF yield of 2.5% and EV/EBITDA of 8.1x and a FY17E FCF yield of 7.2% and EV/EBITDA of 6.9x, with an implied FY17E dividend yield of just 1.0%).
BHP’s strategy is a risk: In addition to a fairly expensive valuation (on our estimates) and the likely negative momentum of lower commodity prices in the near term, there are also still questions regarding BHP’s recently announced strategic overhaul, which includes major changes to divisional management and a regrouping of segments. There is also a relatively high risk that BHP pursues M&A opportunities, especially in copper and possibly conventional oil. An acquisition of a tier-1 copper asset would not be cheap (greater than 10x spot EBITDA), and the winner of what would likely be a bidding war would be at risk of overpaying. We would prefer to see BHP use cash flow to pay down debt rather than compete to buy high quality copper assets from the likes of Freeport or Glencore. All else equal, we prefer sellers of good assets over buyers.
Downgrading BHP shares after the recent rally: We have downgraded BHP shares from Buy to Hold (but not changed our target prices) as we cannot identify likely near-term positive catalysts, the company’s strategy is still a risk, commodity prices should go lower in the near-term following the recent strength, and BHP’s valuation based on our estimates is no longer inexpensive. BHP is well positioned for the long term, but the Buy case is not evident for now."

Chart of the week: Huge upside for BHP and Tesco?

i wouldn't touch tesco, but bought a few BLT for my sipp about 10 days ago

All of the reputable miners have bounced strongly, but I still prefer to use the 200 MA as my trigger point. Definitely all worth watching and building a stake over the next 6 months. I think last year was a 'go away in may' year, so.......who knows?!!!

have a look at ANTO then

Yes, I agree. ANTO & AAL a stronger signal, imo. But, reading Jefferies above, they expect commodity prices to reverse over the next few months, so not a long term hold yet.

Nomura today downgrades its investment rating on BHP Billiton PLC (LON:BLT) to neutral (from buy) and cut its price target to 850p (from 950p).

Deutsche Bank today reaffirms its hold investment rating on BHP Billiton PLC (LON:BLT) and cut its price target to 900p (from 950p).

Deutsche Bank today reaffirms its hold investment rating on BHP Billiton PLC (LON:BLT) and cut its price target to 880p (from 900p).