BHP’s chief Andrew Mackenzie gets a sheer slice of $8.9 billion profit

Miner BHP Billiton may have made the profit jump of 33%, it failed to make a fair pay to its chief. CEO Andrew Mackenzie has got just a little extra US$103,000 which makes his fiscal 2018 remuneration to US$4.66 million. This represents an amount lower than his maximum potential package which is assumed to be US$13 million per year.

Since his appointment as CEO in 2013, Mr Mackenzie has not received any base salary increase and it does not seem to be coming anytime soon as the company has confirmed to keep his salary unchanged at $1.7 million per annum along with other components of his total remuneration like pension contributions and other benefits.

However, BHP Billiton Limited (BHP) has announced the highest ever final dividend of 63 US cents per share on the back of solid operating performance in FY18. Today morning the company released its annual reports for the year ended 30 June 2018 posting the best underlying profit since 2013-14 with hefty 33% jump in underlying attributable profit to US$8.9 billion.

Driven by higher prices, increased volumes and one-off benefits, company’s underlying EBITDA has gone up to $23.2 billion from $19.4 billion in FY17. Basic earnings per share was 69.6 cents. Though increase in copper production was highest during the year, Iron ore has made the most out of group’s underlying earnings as it contributed $8.9 billion, 39% of group’s underlying EBITDA. Following which copper contributed 28% or $6.5 billion, Coal 19% or $4.4 billion and Petroleum 14% or $3.3 billion.

With the view to strengthen the group’s portfolio, BHP Billiton has undertaken a sale of its Onshore US assets in FY18 for US$10.8 billion. The sale of these assets is anticipated to be completed by the end of October this year. Also, earlier this year, BHP’s Board approved US$2.9 billion in capital expenditure for the South Flank iron ore project in Western Australia, thereby enhancing the average quality grade of BHP’s Western Australia Iron Ore production.

For the second consecutive year, the company has generated over US$12 billion of free cash flow, thereby giving flexibility to company’s debt reduction, future investments and cash returns to shareholders. At year end, the company has brought down its net debt to US$10.9 billion.

Headquartered in Melbourne, BHP Billiton has declared total dividend of 118 US cents including highest ever final dividend of 63 US cents payable on 25 September 2018.

Company’s annual general meeting is due to be held on 8 November 2018 at Adelaide, South Australia.

Despite posting tremendous improvements in profit of the company, BHP Billiton’s stock continues to move down on ASX as share price has fallen by 0.411% to $31.480 today, 17 September 2018 (4:45 PM AEST). The stock has seen a performance change of +20.28% over the past 12 months while it is trading at PE of 33.570 x with market capitalization of $101.52 billion.

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