BHP Billiton is expected to post record $15 billion earnings for the six month period pre-tax. This would give the company a $30 billion plus full year result. It has broken the record for biggest profits posted by a company in Britain with this. The last record was set by Shell three years ago when it unveiled profits of $27.5 billion.
Investors are now looking forward to profits being routed back to shareholders in the form of dividends and they also expect the company to make a share buy back of $10 billion. This expectation is fuelled following Rio Tinto’s $5 billion share buyback last week.
BHP Billiton will have more cash than Rio Tinto for a buy back but its intentions are yet to be announced. There is a good possibility that it may buy back its London listed shares now that it has no immediate need for ‘cash on hand’ since the acquisition of the Saskatchewan Potash Corporation fell through.
However there are analysts who say that BHP Billiton may choose to keep the cash in reserve for expenses and currently unannounced projects in the offing. Current projects like the Olympic Dam copper and South Australian uranium mine expansion will also need cash which can come from company reserves.