BHP buyback fails to cheer shareholders

Marion Dakers
BHP BILLITON’S shares fell yesterday following its half-year results, as some investors called into question the mining giant’s strategy of a share buyback rather than the pursuit of acquisitions.

As analysts pored over BHP’s results statement yesterday, which included a record $10.7bn (£6.7bn) attributable profit and a below-forecast 46 cents dividend payment, its London-listed shares fell 1.44 per cent to 2,464p against an overall rise in the FTSE.

“BHP has been ahead of expectations on net income despite its operating profit falling short – but this could well be due to its effective tax rate of 30.3 per cent, compared to its previous guidance of 34 per cent,” said one analyst, who did not wish to be named.

Another mining analyst, Christian Georges of Olivetree Securities, said that a lack of growth ideas might have disappointed the market. “It’s a company that’s between two worlds, without M&A or convincing plans for organic growth, and it’s lacking in excitement. Future upside is very difficult to envisage, and there might have been some profit taking,” he said.

BHP has pledged to spend $80bn over the next five years on organic growth, but offered few details of which projects would be expanded. It also accelerated its $10bn share buyback programme.