“We have everything we need in our portfolio right now to significantly increase the value of the company”.
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Mackenzie’s roadmap included five strategic areas meant to grow the base value of BHP by more than 70 percent. BHP believes there is another US$3.6 billion ($4.88 billion) of gains to be achieved from such improvements, with unit costs in its major businesses to be roughly half what they were five years ago.
The broker said it has now set a “Outperform” rating on shares of BHP Billiton PLC with a price target of 900.
That’s what BHP Billiton Ltd. (NYSE: BHP) CEO Andrew Mackenzie told attendees at Merrill Lynch Conference in New York Tuesday morning.
“We are not waiting for prices to recover”, said Mr Mackenzie, who has been in the job since May 2013.
COSTS. The name of the game in mining recently has been to cut costs. Improving commodity prices offer further upside. The Company’s Petroleum and Potash segment is engaged in exploration, development and production of oil and gas and potash pre-development.
He also pointed to low cost options to incrementally grow production, and said the company could grow its production (in copper equivalent terms) by 10 per cent for a cost of just $US1.5 billion.
“In the next financial year, we could expect to generate, at early April spot prices and foreign exchange rates, free cash flow in excess of $US5 billion ($A6.79 billion) dollars”, he said. For example, a decision on the Mad Dog oil project in the Gulf of Mexico is expected within 18 months. “We have opportunities identified at a number of our major assets that we expect to create significant value over time”, Mackenzie says.
“We are increasing our exploration activity to take advantage of falling costs as others pull back”. BHP Billiton Limited operates as a subsidiary of BHP Billiton Group.
A regionally-focused approach supported by globalised support functions – like technology – was introduced, with Jurgens promoted to global chief technology officer reporting directly to Mackenzie. Output volumes of iron ore, petroleum, copper and energy coal declined year over year. The company has a market cap of 46.63 billion GBP.
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The company has also reorganised its management to create a leaner and more agile business to meet the challenge of operating in a low commodity price world.
