Macquarie had flagged an underlying profit of $6.7 billion, while the consensus expectation was about $7 billion.
Attributable profit surged nearly 83% to $8.1 billion, while underlying earnings before interest and tax were up 15% to $12.4 billion.
Underlying EBIT for the iron ore division increased $1.7 billion to $6.5 billion, coal EBIT increased by $431 million to $510 million and aluminium, manganese and nickel EBIT increased by $256 million to $148 million, while underlying EBIT across the petroleum and copper divisions fell slightly.
Revenue increased 5.9% to $33.9 billion, with the iron ore division accounting for a third of the total.
BHP CEO Andrew Mackenzie attributed the strong performance to productivity improvements and additional volume from the company’s largely brownfield investment program.
“The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results,” he said.
“Annualised productivity led volume and cost efficiencies totalling $4.9 billion are now embedded and this is expected to increase to $5.5 billion by the end of the 2014 financial year.
“This sustainable increase in productivity supported a 9% increase in the group’s underlying EBIT margin to 38% and a strong improvement in the group’s underlying return on capital to 22%.”
BHP said a 65% increase in net operating cashflow to $11.9 billion and a 25% drop in cash outflows from investing activities had led to a $7.8 billion increase in free cashflow during the period.
The strong free cashflow generation is expected to lower debt of $27.1 billion to $25 billion by the end of June this year.
“With strong free cashflow, selective investment and continued simplification, we are well placed to extend our strong track record of capital management,” Mackenzie said.
“I want to acknowledge the hard work of BHP Billiton employees and their contribution to these strong results. Together we are improving the productivity and competitiveness of the Company and the countries in which we operate.”
BHP declared an interim dividend of 59c per share, a 3.5% increase, which it said would be “comfortably” covered by internal cashflow.
Capital and exploration expenditure is expected to drop by 25% in the 2014 financial year to $16.1 billion, with 10 mostly brownfield projects on schedule at the end of December with a budget of $17.5 billion.
Mackenzie said BHP’s opportunity rich portfolio was its key point of difference.
“By maintaining strict financial discipline and increasing internal competition for capital we intend to further differentiate ourselves by creating a more capital efficient organisation,” he said.
“On this basis, we believe an average rate of return of greater than 20% is achievable for our portfolio of major development options.”
BHP sees strong demand for iron ore and coal to continue and improving outlooks for nickel and aluminium, with surpluses tipped to ease.
