Shareholders in the world's largest resources company, BHP Billiton Limited (ASX: BHP), look set to receive additional cash or dividends this year.
BHP chief executive Andrew McKenzie has told London's The Sunday Times that the company was looking to return cash to shareholders, once it hits its target of reducing debt to US$25 billion.
"Once we get to that number (US$25 billion), we will have a serious and practical conversation on how we might increase cash returns to shareholders," said Mr McKenzie.
With US$5.5 billion in cost cutting targeted by the end of 2014, BHP could be set to announce a multi-billion dollar share buyback as early as August 2014. UBS analysts estimate the giant miner could spend up to US$5 billion on share buybacks.
According to The Australian, BHP has spent $62 billion on buybacks and dividends – around half the company's underlying earnings – in the past ten years.
It's all part of making the big miner a much more efficient machine, which is Mr McKenzie's key focus. Capital expenditure has fallen from US$22 billion to just US$15 billion, and although sales have fallen, return on capital has risen. Productivity, capital efficiency and big data are the three key areas of his focus each day.
One example he note was BHP's trucks. "If every truck in our fleet ran 6,000 hours a year instead of 4,000, you could measure the financial difference in nine figures."
And as somewhat of an understatement, he added, "There is a lot of money at stake here."
Mr McKenzie says he spends little time these days on takeovers, but opportunities will come.
Despite the falls in commodities prices, particularly iron ore and copper, which make up 70% of BHP's 2013 earnings before interest and tax (EBIT), Mr McKenzie says there will be a 75% increase in demand for commodities over the next 15 years, setting the company up for a strong future.
Foolish takeaway
Unlike Rio Tinto Limited (ASX: RIO), Fortescue Metals Group (ASX: FMG) and other junior pure play iron ore miners such as Atlas Iron Limited (ASX: AGO), BHP is much more diversified and a strong candidate for those investors looking for exposure to the resources sector.
