RPT-COLUMN-Elliott’s BHP adventure pays dividends, but not total victory – by Clyde Russell (Reuters U.S. – August 22, 2017)


LAUNCESTON, Australia, Aug 22 (Reuters) – It’s tempting to think that BHP Billiton has caved into demands by activist investor Elliott Advisors by agreeing to sell its U.S. onshore oil and gas business and by boosting the returns to shareholders.

After all, divesting the U.S. shale assets and lifting shareholder returns were two of Elliott’s three main points, made by the hedge fund in a letter to BHP directors in April. But it’s worth asking whether the decision to put the shale assets up for sale and increase dividends was motivated mainly by Elliott’s intervention, or whether they would have happened anyway.

As far as dividends are concerned, it was always likely that BHP would follow fellow miners like Rio Tinto in returning substantially more cash to investors, especially in the light of the huge boost to free cash flow from sharply higher prices for iron ore and coal.

BHP said in its annual results on Tuesday that it would triple its final dividend to $0.43 a share, slightly below the expectations of analysts.

The world’s largest mining company also posted a five-fold rise in annual underlying profit to $6.7 billion for the year to June 30, which was below the market consensus for earnings of around $7.4 billion. Given the earnings miss, it could be argued the increase in the dividend was generous.

For the rest of this article: https://www.reuters.com/article/column-russell-bhp-commodities-idUSL4N1L815E