[miningmx.com] — BHP Billiton has appeased shareholders who were looking for a slice of the diversified miner’s record cash flows, rebasing its final dividend by 22%, paying out 55 US cents per share.
Together with the interim dividend of 46 cents per share, this brought the total dividend for 2011 to 101 cents.
The announcement on Wednesday came after the group finalised the buy-back of 4% of its issued shares and capital for $10bn in June. The group reported full-year operating cash flows of $30.1bn for 2011, up 73.9%, and earnings per share of 429 US cents.
CEO Marius Kloppers said BHP would not embark on further buy-backs. He said that as for the dividend, investors should expect more of the same – at least – in future. “We are confident that, like we’ve done for the past 100 years, if we pay a dividend we can maintain it,’ Kloppers said.
He said BHP’s foremost priorities for generated cash would be reinvestment into the business, as well as keeping gearing at a level where the group could maintain its single A credit rating. Subsequent to this, it would consider a dividend increase or share buy-backs.
During 2011, $12.9bn accounted for project development and exploration, $10bn for the buyback programme and $5.1bn for dividend payments.
BHP would spend around $20bn on project development in the next financial year.
The share buyback was initiated following BHP’s failed attempt to acquire Potash Corp in 2010. Investors had been divided over whether to expect another buyback this time around, following BHP’s successful $12.1bn bid for US shale gas producer Petrohawk Energy.
“We weren’t expecting any capital management initiative just now given the Petrohawk acquisition but with their cash generation, low debt level and commodities boom, we will focus on it in the next 12 months,’ investment manager at Karara Capital, Rohan Walsh, told Reuters.
Fairfax’s Carole Ferguson told Miningmx that although the dividend was starting to look “meaningful’, shareholders would’ve been expecting more.
“Shareholders would like to see more of their money back,’ she said, adding that some may have reservations about the price which BHP paid for Petrohawk.
Barend Ritter, resource specialist at Sanlam Investment Management said the dividend represented a good increase. “It is difficult to be too unhappy with that,’ he said. “The market would understand what they are trying to achieve.’
The only minor gripe which shareholders might have, Ritter said, was that some of the capital to be deployed at major growth projects Olympic Dam and Jansen Potash, would go towards the funding of long-term capacity and will not deliver any yield over the short term.
“Some may argue they are now funding the yields of future shareholders,’ he said.
Kloppers remained cautious on the outlook for the global economy and commodities, saying global imbalances and high levels of debt continue to create uncertainty.
“A protracted recovery remains our base case assumption for the developed world,’ he said. “Across the important growth economies of China and India, recent economic data suggests monetary policy is having the intended effect.’
Also, “the strong pace of growth in demand for steelmaking raw materials, particularly in China, is expected to slow in the longer term, as underlying growth reverts to a more sustainable level.’
