JOHANNESBURG (miningweekly.com) – Diversified mining major BHP Billiton, whose record 2009 dividend represents a sixfold growth in seven years, has paid a massive $32-billion in cash to shareholders since BHP and Billiton merged in 2001, BHP Billiton CEO Marius Kloppers said on Wednesday.
This year's dividend payout of $4,6-billion, in the teeth of the worst economic downturn since the 1930s, was not only an all-time company record, but it also totalled considerably more than its entire net operating cash flow of 2002, the first reporting year after the merger, BHP Billiton CFO Alex Vanselow pointed out.
Imara investment manager Bruce Williamson said that BHP Billiton had been particularly sharp in achieving a record net cash flow in difficult times and being able to pay a "fat dividend", when some other diversified majors were not paying dividends at all, including South Africa's iconic Anglo American.
The total of $32-billion in seven years had been returned as part of the company's progressive dividend policy, and through share buybacks.
The record 2009 dividend totalled 82c a share, 17,1% higher than in 2008, and more than six times the 13c of the first reporting year following the merger.
"Sixfold in seven years," Vanselow reiterated.
The company also generated record net operating cash flow of $18,9-billion, despite commodity prices plummeting, and pressed on with its nigh-$11-billion capital-expenditure (capex) programme, in a year characterised by capex cutbacks.
Simultaneously, it raised significant funds in the US debt-capital markets "on very good terms" on the strength of its good credit rating and strong balance sheet, and would again be investing $10,7-billion capex this financial year.
The company has low 12% gearing and medium- and long-term debt maturity, a high-margin diversified portfolio and a deep inventory of growth options.
"We are in a position to continue to invest, and have the balance sheet capacity to make opportunistic mergers and acquisitions," Vanselow said.
He added that the company had had difficulty in illustrating the value and strength of its strategy of scale, diversification and tier-one quality during the prolonged upward cycle pre-October 2008, but was having no difficulty illustrating that value now.
"In a split second, we moved from high prices and insatiable demand to free falling prices and consumer destocking," Vanselow recalled.
While individual commodities were cyclical and volatile, the strategy of diversification, scale and tier-one quality was providing a natural buffer against volatility and cyclical impact, Vanselow said, adding that the company's margins had resiliently kept above the 30% level.