Rich seam for in­vestors as min­ing gi­ant pre­pares £3.1bn div­i­dend

The Sunday Telegraph - Money & Business - - Business - By Jon Yeo­mans

BHP Bil­li­ton is poised to un­veil a bumper $4bn (£3.1bn) div­i­dend as it at­tempts to head off the ac­tivist hedge fund El­liott Ad­vi­sors, which has been run­ning an ag­gres­sive cam­paign to over­haul its strat­egy and boost re­turns to share­hold­ers.

The min­ing gi­ant is on track to post a div­i­dend of 84 US cents (65p) a share when it re­ports its full-year re­sults late on Mon­day night in Aus­tralia. Its earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion are ex­pected to be in the range of $20bn (£15.5bn), up from $12bn (£9.3bn) a year ago.

The div­i­dend would be its largest since 2015, and marks the dual-listed miner’s re­cov­ery fol­low­ing a two-year slump in com­mod­ity prices. As its prof­its col­lapsed, BHP was forced to aban­don its long-held pol­icy of in­creas­ing div­i­dends every year. It is now com­mit­ted to pay­ing out 50pc of its un­der­ly­ing earn­ings as div­i­dends.

BHP, led by An­drew Macken­zie since 2013, is un­der pres­sure from El­liott to spin off its US petroleum arm, which in­cludes costly on­shore shale as­sets it bought prior to the col­lapse in oil prices. El­liott went pub­lic with its de­mands in April, at­tack­ing BHP’S “un­der­per­for­mance” com­pared to its peers and call­ing for an end to its dual list­ing in Lon­don and Syd­ney in or­der to re­turn more cash to in­vestors.

Last week the fund raised its hold­ing in BHP’S Lon­don shares to 5pc, a thresh­old that al­lows it to call com­pany meet­ings and nom­i­nate direc­tors to the board. The dead­line to pro­pose board nom­i­nees falls on Aug 23, the day af­ter BHP’S re­sults are re­vealed.

BHP may shed more light on its plans once in­com­ing chair­man Ken Macken­zie takes up the role in Septem­ber. Mr Macken­zie has al­ready held more than 100 meet­ings with in­vestors to lis­ten to their con­cerns in the wake of El­liott’s high-pro­file cam­paign.

Peter O’con­ner, an Aus­tralia-based an­a­lyst at bro­ker Shaw & Part­ners, backed the new chair­man to prune the port­fo­lio and start de­liv­er­ing re­sults.

He sug­gested that sell­ing off as­sets may make it eas­ier for BHP to con­sider end­ing its dual list­ing in favour of a pri­mary list­ing in Aus­tralia – one of El­liott’s key de­mands.

“BHP is po­si­tioned to con­tinue the up­ward jour­ney from its re­cent tight cor­ner – a once in a decade event – un­der the new chair­man, who should be armed with reams of ‘post-lis­ten­ing tour’ ideas and sug­ges­tions, and call­ing on the lessons learnt from past re­struc­tur­ing episodes,” Mr O’con­ner said.

BHP has been helped by stronger met­als prices over the last year, as de­mand from China has re­cov­ered. The com­pany is one of the world’s big­gest min­ers of iron ore, used to make steel, but it has sig­nalled its in­ten­tion to grow its pres­ence in off­shore oil and cop­per.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.