BHP Billiton Limited’s [ASX:BHP] share price has jumped up this morning by $0.44, following yesterday’s sharp fall.
In case you’re feeling deflated with the news of Australia’s political uncertainty, you’re not the only one. It has been speculated that BHP’s drop came as a knee-jerk reaction to the ongoing Canberra crisis that has infected every media outlet this week.
It was a concerning development, as the company had just released a record dividend to shareholders — US$1.18 per share, an increase of 42%.
But things are looking up for BHP today, with a positive improvement of $32.52 per share at time of writing.
More into the drop of BHP’s share price
On Tuesday, BHP reported a full-year profit for the 12 months ending 30 June 2018 of US$9,622 million — a 33% increase from the previous year. The record dividend was testament to the company’s strong operating performance, solid prices and capital discipline, according to BHP CEO Andrew Mackenzie.
So, with such positive announcements, the steep drop was unexpected — and left room for opportunistic bargain hunters to buy into the low-priced stock, after the market dragged it down for unexpected reasons.
But the delayed reaction in share price could also be seen as a good thing — seeing as investors may be disappointed by the news that BHP had cut its forecast on productivity gains for FY19.
What’s next for BHP?
Despite the rise, some believe this is the last piece of good news we’ll see from BHP for a while…
Rising costs are currently an inevitability across the mining sector — and while the weakening of the Aussie dollar could cushion the blow at some of BHP’s local operations, this should be carefully considered by investors.
The company’s decision to cut productivity savings in half — partly in response to the disappointing performance at Queensland Coal — should also be noted.
Overall, while the results from this year look to be a positive improvement, there isn’t much likely change for FY19.
But those who already hold BHP stock shouldn’t worry too much — the world’s biggest miner is cashed up and has little reason not to pay out its shareholders. Plus — with the funds of its US$10.8 billion sale of its unconventional shale assets in the US, shareholders will be licking their lips…
Resources Analyst, Markets & Money
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