BHP Billiton's shares slump in Australia on lack of stock buyback, demerger plans
By Glenda Kwek, AFP
August 21, 2014, 12:04 am TWN
SYDNEY--BHP Billiton's shares closed almost four percent lower in Australia Wednesday, as investors fled over the lack of a stock buyback and the global mining giant's demerger plans.
The slump came as global credit agencies affirmed their ratings for the world's biggest miner and maintained a stable outlook.
The stock closed 3.91 percent lower at AU$38.13 (US$35.43), with the sell-off following a similar scenario in London where the firm is also listed.
The company on Tuesday reported weaker-than-expected underlying earnings of US$13.4 billion and a net profit of US$13.8 billion.
BHP also outlined a proposal to create a new independent company by demerging non-core assets, including some of its aluminum, coal, manganese, nickel and silver operations.
But the Anglo-Australian resource major failed to announce the estimated US$3.0 billion share buyback that some analysts had been expecting.
Moody's and Standard and Poor's said their credit ratings for BHP remained unchanged, reflecting their expectations the split would have only a "minimal impact" on the company.
"The rating affirmation reflects the minimal impact that the proposed spin-off will have on BHP Billiton's business and financial profiles," said Moody's senior analyst Matthew Moore.
Standard & Poor's credit analyst May Zhong said the "new, leaner" firm was not expected to experience "materially different" cash flow volatility despite the moderate reduction in asset and commodity diversity.