When it comes to commodity stocks, there is perhaps no name more prolific than BHP Billiton Ltd (BHP). The Australian-based natural resource giant has operations across the world and has its hands in everything from iron ore and natural gas to aluminum and diamond mining. And while the company’s over 150-year history is certainly a testament to its success, BHP Billiton has recently fallen out of favor with commodity investors, as concerns over falling revenue have come to the forefront [for more commodity news and analysis subscribe to our free newsletter].
Can BHP Get Out Of Its Rut?
BHP Billiton reported that during the first half of 2013, the company’s revenue fell 14% and profit declined 43%, mostly due to lower iron-ore prices. In order to make a turnaround, the company has set its focus on cutting costs and boosting profitability; just this year, BHP cut nearly $2 billion in operating costs.
In hopes of finding new streams of revenue, BHP Billiton announced earlier this week that it is revisiting plans to develop a coking coal deposit in Queensland, Australia. The company has entered a joint venture, known as BHP Billiton Mitsubishi Alliance (BMA), and plans to open a new mine that will produce up to 14 million metric tons of coal a year and to utilize the Red Hill resource in the Bowen Basin to expand existing pits [see BP Energy Report: U.S. Production On The Rise, Global Demand Slows].
Though this project essentially goes against the company’s focus to cut costs, BHP Billiton has cited growing coal demand in China and India as one of the main reasons why it thinks the new operation will be able to turn a profit.
And though BHP Billiton is still waiting for approval of the new project, investors will want to keep an eye out for the company to see whether or not the stock can make a comeback.
Year-to-date, BHP Billiton shares are down 21.68% [see The Uncertain Future For Coal]:
Disclosure: No positions at time of writing.