3 Blue-chip Resource Sector Stocks on a downtrend – RIO, BHP and WPL

  • Aug 21, 2018 AEST
  • Team Kalkine
3 Blue-chip Resource Sector Stocks on a downtrend – RIO, BHP and WPL

Rio Tinto Limited (ASX: RIO)

RIO has reported a healthy half year result with underlying EBITDA of $9.2 billion.  A better market environment drove operating cash flow of $5.2 billion. The Tier 1 assets along with operational capability helped in attaining 43 percent EBITDA margin. Mine-to-market productivity program has helped manage inflationary pressures. The group has now come out with better shareholder returns. In fact, RIO reported interim dividend of $2.2 billion with an enhancement of $1.0 billion to share buyback program. The lately announced divestment will also be returned to shareholders. Highlights included the following -

  • Underlying EBITDA increase from US$ 9,042 m for the 6 months ended June 30, 2017 to US$ 9,198 m for the 6 months ended June 30, 2018.
  • Underlying earnings increase from US$ 3,941 m for the 6 months ended June 30, 2017 to $US 4,416 m for the 6 months ended June 30, 2018.
  • Net earnings increase from US$ 3,305 m in the 6 months ended June 30, 2017 to US$4,380 m in the 6 months ended June 30, 2018.

Funding for the preliminary work at Koodaideri project on iron ore has been approved lately. This will be Rio’s first intelligent mine having high tech advances backed by automation and robotics. The construction has been slated for 2019 with first production in 2021, while this is subject to requisite approvals. Meanwhile, RIO and the Government of Quebec have a renewed partnership agreement that strengthens their joint commitment to RIO’s world-class aluminium assets in the region.

RIO Stock edged low at $72.890, as at August 21, 2018, 1:50 PM AEST.

 BHP Billiton Limited (ASX: BHP)

With the release of FY18 result, BHP has indicated for a dividend payout of 63 cents with a 33 per cent rise in underlying net profit to $US8.93 bn while a 20% rise in revenue has been indicated. The commodity prices helped the group to announce a record final dividend driven by operating performance and capital management. The group has also progressed with regards to onshore US business for $US10.8 billion, and has particularly entered into agreements for the sale of interests.

For the next financial year, costs may rise while dollar value may still offer some support. Further, BHP has cut down its target on productivity savings to US$1 billion owing to asset divestments decisions along with performance by coal business. Meanwhile, BHP has announced about an agreement for settling the class action filed in relation to Samarco dam failure.

BHP Stock edged lower by 1.7% at $ 32.620 before market close on August 21, 2018.

Woodside Petroleum Limited (ASX: WPL)

Woodside Petroleum’s half year 2018 results included reported NPAT of $54m with improved production and sales revenue. This also led to a 25% rise in operating cash flow of $1,540m. The group now expects investment expenditure to be between $2,000 and $2,050m in view of the acquisition of an increased interest in Scarborough.

Group’s Second Quarter Report for the Period ended June 30, 2018 included production rise from 20.7MMboe in the 3 months ended June 30, 2017 to 22.1MMboe in the 3 months ended June 30, 2018. Sales revenues increased from US$868 million in the 3 months ended June 30, 2017 to US$1,082 million in the three months ended June 30, 2018. Further, total revenues increased from US$924 million in the 3 months ended June 30, 2017 to US$1,145 in the three months ended June 30, 2018. However, there was a rise of total exploration and evaluation expense from US$26 million in the 3 months ended June 30, 2017 to US$131 million in the 3 months ended June 30, 2018. The group achieved 100% reliability at Pluto LN and executed Northwest shelf integrated onshore and offshore turnaround while production from Wheatstone Train 2 commenced with planned ramped up. The group also entered a non-binding MOU for the supply of approximately 125 TJ/d of domestic gas over 20–25 years underpinned by the proposed Scarborough development.

WPL stock was down 2.7% to $ 36.460, before market close on August 21, 2018.

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