SHARES in miner BHP Billiton were up by 6.24 per cent yesterday after the Australian firm revealed it had slashed capital expenditure (capex) for 2015 to $12.6bn (£8.2bn).
The company reported capex of $16bn in the year ended June 2014. However, in the six months to December 2014, it paid out just $6.4bn, down 23 per cent on the same period of 2013. BHP said the cut in capex was supported by “continued improvement in the group’s capital productivity”.
Analysts at Accendo Markets stated that while the capex cut was “no surprise given the falls in commodity prices over the past 18 months”, investors would be “relieved at the prospect of more cash being at hand to allow maintenance and progression of dividends in the near term”.
The first half of the 2015 financial year saw profit fall by 47.4 per cent, from $8.1bn to $4.3bn, while the dividend was increased by 5.1 per cent, from 59 cents per share to 62 cents.
Andrew Mackenzie, BHP chief executive, said the results demonstrated the effectiveness of the group’s strategy and commented: “We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns. We started to prepare for a sustained period of lower prices almost three years ago by increasing our focus on efficiency and lowering our investment.”
Mackenzie added that the company had seen “rapid improvement” across all of its major businesses.