In its half-year report (ending December 2014) — a six-month period characterized by volatile commodity markets — BHP Billiton met or exceeded expectations in most areas. Earnings declined by 12% to $14.5 billion as lower average realized prices more than offset the substantial productivity gains that continue to be achieved across the portfolio.

Group production increased by 9% during the December 2014 half year with records achieved for eight operations and five commodities. “We remain on track to deliver group production growth of 16% over the two years to the end of the 2015 financial year,” said BHP Billiton Chief Executive Officer Andrew Mackenzie.

BHP extended its track record of delivering sustainable performance improvement with $2.4 billion of productivity gains achieved during the period. “We remain on track to deliver at least $4 billion of productivity gains from our core portfolio by the end of the 2017 financial year,” Mackenzie said. “By further improving productivity and reducing our rate of investment, we delivered a substantial $4.1 billion of free cash flow during the period, despite weaker commodity prices.”

BHP Billiton’s share of capital and exploration expenditure declined by 23% to $6.4 billion. Continued improvement in the group’s capital productivity is expected to support a reduction in forecast capital and exploration expenditure for the 2015 financial year to $12.6 billion, 15% below original guidance. “We expect capital and exploration expenditure to be further reduced to $10.8 billion in the 2016 financial year,” Mackenzie said.

During December, BHP announced its intention to create a new company, South32, through a proposed demerger. BHP Billiton expects to release all shareholder documentation with full details of the demerger in mid-March, with a shareholder vote taking place in early May. The proposed demerger remains on track to be completed in the first half of 2015.

At the end of 2014 half year, BHP Billiton had seven major projects under development with a combined budget of $13.5 billion. The Escondida Oxide Leach Area Project (OLAP) was successfully completed and the BMA Hay Point Stage Three Expansion project loaded first coal on January 12, both on revised schedule and budget. During the period, BHP approved a $361 million increase to the budget of the Escondida Organic Growth project 1 to $4.2 billion. The budget revision reflected challenges associated with contractor progress, which have since been addressed and the project remains on the original schedule.