Switch to:
BHP Billiton Ltd (NYSE:BHP)
Gross Margin
100.00% (As of Dec. 2013)

Gross Margin is calculated as gross profit divided by its revenue. BHP Billiton Ltd's gross profit for the six months ended in Dec. 2013 was $33,948 Mil. BHP Billiton Ltd's revenue for the six months ended in Dec. 2013 was $33,948 Mil. Therefore, BHP Billiton Ltd's Gross Margin for the quarter that ended in Dec. 2013 was 100.00%.

Warning Sign:

BHP Billiton Ltd gross margin has been in long term decline. The average rate of decline per year is -5.1%.

BHP' s 10-Year Gross Margin Range
Min: -9.07   Max: 100
Current: 61.91

-9.07
100

During the past 13 years, the highest Gross Margin of BHP Billiton Ltd was 100.00%. The lowest was -9.07%. And the median was 46.91%.

BHP's Gross Marginis ranked lower than
100% of the Companies
in the Global Industrial Metals & Minerals industry.

( Industry Median: vs. BHP: 61.91 )

BHP Billiton Ltd had a gross margin of 100.00% for the quarter that ended in Dec. 2013 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for BHP Billiton Ltd was -5.10% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

BHP Billiton Ltd's Gross Margin for the fiscal year that ended in Jun. 2013 is calculated as

Gross Margin (A: Jun. 2013 )=Gross Profit (A: Jun. 2013 ) / Revenue (A: Jun. 2013 )
=40839 / 65968
=(Revenue - Cost of Goods Sold) / Revenue
=(65968 - 25129) / 65968
=61.91 %

BHP Billiton Ltd's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=33948 / 33948
=(Revenue - Cost of Goods Sold) / Revenue
=(33948 - 0) / 33948
=100.00 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

BHP Billiton Ltd had a gross margin of 100.00% for the quarter that ended in Dec. 2013 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

BHP Billiton Ltd Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross Margin 46.9146.8073.7472.9275.4576.1087.8167.6463.0761.91

BHP Billiton Ltd Semi-Annual Data

Jun09Dec09Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13
Gross Margin 41.26100.0076.73100.0037.75100.0023.24100.0025.88100.00
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide