BHP Billiton downgraded as financial flexibility looks weak

Note* - All images used are for editorial and illustrative purposes only and may not originate from the original news provider or associated company.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from any location or device.

Media Packs

Expand Your Reach With Our Customized Solutions Empowering Your Campaigns To Maximize Your Reach & Drive Real Results!

– Access the Media Pack Now

– Book a Conference Call

– Leave Message for Us to Get Back

Related stories

METAL CHINA/DIECASTING/NONFERROUS CHINA 2025 Concluded with a Big Success

China Foundry Connecting the World With the theme of "building...

US on its Path Towards Exploring Rare Earth Elements

In April 2025, China went on to impose a...

The US Has the Option to Mine its Own Rare Earth Elements

So, every time you see your phone, open your...

MENA Copper Market: Gradual Growth and Strategic Shifts

A Cautious Climb in the Copper Arc The copper market...

BHP Billiton PLC was downgraded at RBC Capital Markets as a result of its challenging cash flow outlook and doubts about the South32 spinoff.

Analyst Timothy Huff lowered his rating on the stock to underperform from sector perform and cut his price target to £1,500 from £1,800.

He noted that BHP has underperformed its mining sector peers in the past six months as investors price in potential structural changes in the oil and iron ore markets.

Despite having a neutral view on BHP’s US$13-billion capex commitment, its “Four Pillar” strategy to focus on iron ore, copper, coal and oil, as well as the planned spinoff of its aluminum, nickel, silver and coal divisions, Mr. Huff believes the timing of this market transition is difficult.

“We think this could be a case of ‘Good idea, bad timing,’ and question BHP’s financial flexibility in the coming years,” he said.
The analyst noted that BHP’s dividend costs the company US$6.5-billion, maintenance capex runs another US$9.5-billion, and additional growth capex is a further US$3-billion to US$4-billion.

In total, he estimates the company needs US$16-billion to US$20-billion in operating cash flow just to cover its capex and dividend requirements.

“On RBC forecasts, BHP will generate just enough to cover both of these needs,” Mr. Huff told clients. “However, on spot price forecasts, BHP only generates enough to cover maintenance capex and the dividend.”

Latest stories

Related stories

METAL CHINA/DIECASTING/NONFERROUS CHINA 2025 Concluded with a Big Success

China Foundry Connecting the World With the theme of "building...

US on its Path Towards Exploring Rare Earth Elements

In April 2025, China went on to impose a...

The US Has the Option to Mine its Own Rare Earth Elements

So, every time you see your phone, open your...

MENA Copper Market: Gradual Growth and Strategic Shifts

A Cautious Climb in the Copper Arc The copper market...

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from any location or device.

Media Packs

Expand Your Reach With Our Customized Solutions Empowering Your Campaigns To Maximize Your Reach & Drive Real Results!

– Access the Media Pack Now

– Book a Conference Call

– Leave Message for Us to Get Back