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BHP Billiton Ltd  (NYSE:BHP) Operating Income: $11,753 Mil (TTM As of Dec. 2016)

BHP Billiton Ltd's Operating Income for the six months ended in Dec. 2016 was $6,057 Mil. ts operating income for the trailing twelve months (TTM) ended in Dec. 2016 was $11,753 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. BHP Billiton Ltd's Operating Income for the six months ended in Dec. 2016 was $6,057 Mil. BHP Billiton Ltd's Revenue for the six months ended in Dec. 2016 was $18,796 Mil. Therefore, BHP Billiton Ltd's Operating Margin % for the quarter that ended in Dec. 2016 was 32.22%.

BHP Billiton Ltd's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. BHP Billiton Ltd's annualized ROC % for the quarter that ended in Dec. 2016 was 9.73%. BHP Billiton Ltd's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2016 was 14.41%.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

BHP Billiton Ltd Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Operating Income Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 21,977.00 22,649.00 8,670.00 -6,235.00 11,753.00

BHP Billiton Ltd Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
Operating Income Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 740.00 -7,030.00 795.00 6,057.00 5,696.00

Calculation

Operating income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

BHP Billiton Ltd's Operating Income for the fiscal year that ended in Jun. 2017 is calculated as

BHP Billiton Ltd's Operating Income for the quarter that ended in is calculated as

Operating Income(Q: Dec. 2016 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=18796-0-0
-Research & Development-Depreciation, Depletion and Amortization-Others (1)
-0-3800-8939
=6,057

Operating Income(Q: Dec. 2016 )
=EBITDA-Depreciation, Depletion and Amortization-Others (2)
=9785-3800--72
=6,057

For stock reported semi-annually, GuruFocus uses latest annual data as the TTM data. Operating Income for the trailing twelve months (TTM) ended in Dec. 2016 was $11,753 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

BHP Billiton Ltd's annualized ROC % for the quarter that ended in Dec. 2016 is calculated as:

ROC %(Q: Dec. 2016 )
=NOPAT/Average Invested Capital
=Operating Income*(1-Tax Rate)/( (Invested Capital (Q: Jun. 20 ) + Invested Capital (Q: Dec. 2016 ))/2)
=12114 * ( 1 - 37.01% )/( (80271 + 76603)/2)
=7630.6086/78437
=9.73 %

where

Invested Capital(Q: Jun. 20 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Current Portion of Long-Term Debt + Total Equity - Cash
=31768 + 4653 + 54290 - 10440
=80271

Invested Capital(Q: Dec. 2016 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Current Portion of Long-Term Debt + Total Equity - Cash
=30670 + 3374 + 56649 - 14090
=76603

Note: The Operating Income data used here is two times the semi-annual (Dec. 2016) operating income data.

2. Joel Greenblatt's definition of Return on Capital:

BHP Billiton Ltd's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2016 is calculated as:

ROC (Joel Greenblatt's)(Q: Dec. 2016 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=EBIT/Average of (Property, Plant and Equipment+Net Working Capital)
     Q: Jun. 20  Q: Dec. 2016
=EBIT/( ( (Property, Plant and Equipment + Net Working Capital) + (Property, Plant and Equipment + Net Working Capital) )/2 )
=11970/( ( (83975 + max(-413, 0)) + (82170 + max(-1214, 0)) )/2 )
=11970/( ( 83975 + 82170 )/2 )
=11970/83072.5
=14.41 %

where Working Capital is:

Working Capital(Q: Jun. 20 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(3722 + 3411 + 141) - (5840 + 77 + 1770)
=-413

Working Capital(Q: Dec. 2016 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(3781 + 3499 + 131) - (6463 + 153 + 2009)
=-1214

When net working capital is negative, 0 is used.

Note: The EBIT data used here is two times the semi-annual (Dec. 2016) EBIT data.

3. Operating Income is also linked to Operating Margin:

BHP Billiton Ltd's Operating Margin % for the quarter that ended in Dec. 2016 is calculated as:

Operating Margin %=Operating Income (Q: Dec. 2016 )/Revenue (Q: Dec. 2016 )
=6057/18796
=32.22 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the operating income growth rate using operating income per share data.


Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


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