BHP Billiton Limited (ASX: BHP) has released its operational review for the six-months ended 31 December 2016, reducing its full-year production guidance for copper. Regardless, its shares have soared more than 2.6% today, compared to a 2% rise for Rio Tinto Limited (ASX: RIO) and 0.8% for Fortescue Metals Group Limited (ASX: FMG).
The Results
According to the release, BHP Billiton now expects to produce roughly 1.62 million tonnes (Mt) of the resource, roughly 2% below previous guidance. Production for the half just completed was impacted by a four-day investigation at its Escondida operation following a fatality in October, as well as an unplanned outage at Pampa Norte. Meanwhile, there was also unplanned maintenance that began at Olympic Dam in December which will take its toll on full-year production.
Notably, BHP Billiton's copper division accounted for almost 27% of the group's overall revenue in the most recent financial year, as well as 30% of the group's underlying earnings before interest and tax (EBIT).
Elsewhere, the miner maintained its full-year production guidance for its other three major commodities, being petroleum, iron ore and coal. It achieved record half-year production at Western Australian Iron Ore (WAIO) of 118 Mt, partially thanks to the continued ramp-up of additional capacity at Jimblebar, and 21 Mt of metallurgical coal.
It also produced 14 Mt of energy coal during the period and 106 million barrels of oil equivalent (MMboe) of petroleum. Compared to the prior corresponding period, those production volumes represented a decline of 4% and 15%, respectively.
Commentary
Commenting on the group's performance, BHP's CEO Andrew Mackenzie said:
"We have performed well during a period of higher prices, with record iron ore volumes achieved at WAIO. Our simpler organisational structure has freed our assets to focus on what matters most and to deliver safer and more productive operations. Our consistent delivery of operating and capital productivity, and strict adherence to our capital allocation framework have positioned us to maximise shareholder value."
Outside of its first-half operations, BHP also noted that it expects its underlying attributable profit for the half to include gains related to asset divestments ranging between US$150 million to US$200 million. It will also record an exceptional item of US$164 million related to the cancellation of the Caroona exploration licence.
Meanwhile, the company will also accelerate its counter-cyclical oil exploration efforts this year following the successful bid for Trion in Mexico.
Foolish Takeaway
BHP's shares have enjoyed a very strong run since bottoming out around $14 early in 2016, and are now fetching almost $28 per share. Whether BHP's shares continue to rally higher will largely depend on the outlook for resource prices from here.
