SINGAPORE (Reuters Breakingviews) – A copper-bottomed BHP can now dig into some tougher matters. The mining titan has reorganised its portfolio and, as full year results unveiled on Tuesday show, repaired its balance sheet.
Cash flows are near record levels last seen seven years ago. That means the board and boss Andrew Mackenzie can turn their attention to pricklier strategic issues including whether to stick with oil, gas and potash.
It has been a rocky ride for the $125 billion company. Business-cycle booms and busts are partly to blame, but bad decisions are, too. Moving into shale energy at the height of the fracking boom was one.
Much of this has been resolved. Most recently, BHP agreed to sell the bulk of its U.S. onshore assets to BP. Debt has more than halved in two years to $10.9 billion, at the bottom end of BHP’s target range. Cost cuts and other improvements lifted EBITDA margins for the year to June 30 to 2011 levels, when mineral prices were substantially higher.
BHP also has followed rivals in handing back more cash. The Australian company booked a record final dividend and confirmed it would return proceeds of its U.S. shale sale.