Both JP Morgan and Macquarie Private Wealth have flagged FY13 underlying earnings of $US12.7 billion ($A13.8 billion), 1% above Bloomberg consensus of $12.6 billion.
Today's figures mark the first under new CEO Andrew Mackenzie, who has promised make productivity a main focus.
Analysts are expecting cost-cutting to be a key feature of the numbers.
“In contrast to Rio’s limited clarity on the big issues last week, BHP is promising increased disclosure (particularly on cost-cutting), leaving the stage set for management to capture the market’s attention if it is able to offer a clearer picture of current operations and the outlook,” Macquarie said.
Macquarie believes that cost-cutting will fall from the annualised $1.5 billion delivered in the first half of FY13, while JP Morgan expects similar savings in the second half.
The Jansen project, called the company’s possible “fifth pillar” by CEO Andrew Mackenzie, is sure to be a focus given Russian potash giant Uralkali’s recent withdrawal from the Belarusian Potash Corp cartel.
“We suspect management will try to avoid being dragged into a detailed discussion on Jansen as this is clearly a difficult project to sell to investors in the current environment,” Macquarie said.
“However, with BHP always looking to break the cartels, management’s longer term potash outlook presumably remains largely unchanged.
“As a result we expect sufficient near term spending merely to preserve rather than progress the Jansen option.”
JP’s base case is that BHP doesn’t proceed with the project due to insufficient returns.
“We believe any announcement to this effect would be taken well by the market (would highlight strong capital discipline),” JP said.
Meanwhile, analysts are also looking for clarity around the petroleum division, particularly the US onshore business after spending $4.8 billion in FY13.
“Clarity around spending levels here will both drive the production outlook (where notably guidance has not yet been given) but will also point to management’s confidence surrounding its Permian acreage where the lack of commentary having drilled around 100 wells is disconcerting,” Macquarie said.
JP pointed to the disappointing production result in FY13 and flagged FY14 guidance be 10% over FY13 levels at around 259 million barrels of oil equivalent.
JP analysts also flagged the risk of impairment charges relating to the US onshore assets.
Macquarie maintained an outperform rating and $A40 price target, while JP maintained a neutral rating and $42 target.
BHP shares last traded 8c lower at $36.79.
