BLT makes over half of its profits from mining commodities - particularly iron ore, coal and copper so it is extremely exposed to demand connected to manufacturing and infrastructure e.g. airports, railways and housing, particularly in emerging-market economies such as China.

The interim results announced today showed underlying profit increased 31% from $5.9bn for the same period last year to $7.8bn, which beat analyst expectations of $6.9bn.(link via Investegate)
Iron ore is BHP’s most lucrative commodity and production increased by 19% for the half-year. Full-year production guidance remains unchanged at 192m tonnes and the group is on track to meet this target.
BHPs net debt has been reduced by $422m to $27bn and the company expect to reduce this by a further $2bn by the end of June.
The interim dividend is 59c - an increase of 3.5% on the previous year. The GB£ has strengthened against the US$ in recent months so I don’t expect any increase in the sterling payment when converted. .Dividend cover is currently 2.6x diluted earnings. Over the past 10 years, dividends have increased from 26 cents to 116 cents - a CAGR of 16%.
Commenting on margins and returns, the CEO Andrew Mackenzie said:
"The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results," he said.
"Annualised productivity led volume and cost efficiencies totalling US$4.9 billion are now embedded and this is expected to increase to US$5.5 billion by the end of the 2014 financial year.
"This sustainable increase in productivity supported a 9 per cent increase in the Group's Underlying EBIT margin to 38 per cent and a strong improvement in the Group's Underlying return on capital to 22 per cent."
BLT is a long-standing member of my ISA shares portfolio and, although the share price can be volatile, I am happy to continue holding for the income. The results have been well received by the market and the share price is up nearly 2% at 1945p.
More on this following the full year results.
As ever, please DYOR.
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