BHP Billiton Limited (ADR) (BHP): This Giant Seems Well Positioned for a Turnaround

Divesting non-core assets

And lastly, BHP Billiton Limited (ADR) (NYSE:BHP) and Rio Tinto plc (ADR) (NYSE:RIO) would be selling their non-core assets in a bid to raise capital and focus on their core competencies. They have collective debt of over $60 billion, and their asset sale programs could fetch as much as $28 billion. Rio Tinto has announced that it would be selling its diamond mines, with little impact on its overall earnings. But Rio Tinto has been downgraded by most investment research firms, citing credit risk behind the downgrades. S&P has a negative outlook for Rio Tinto plc (ADR) (NYSE:RIO).

Talking about BHP Billiton, the company has divested around $5 billion worth of assets this year and sold its Pinto Valley mine for $650 million last month. Up till now, BHP Billiton has sold its diamond and uranium assets, and the company could be looking to sell its manganese, aluminium, and nickel assets as well.

As of now, the specifics of the pending asset divestment are unclear and predicting the impact of the sale would purely be speculation. But, the company seems to be on the road to recovery, which is why is has been attracting a lot of attention lately.

Wrap up

In my opinion, BHP Billiton Limited (ADR) (NYSE:BHP) is making all the right moves. Its debt maybe towering, but BHP Billiton has been navigating times like these since 1885. As a result of overall business restructuring and credit quality, analysts at Macquarie have upgraded BHP Billiton from neutral to outperform, and I couldn’t agree more.

The article This Giant Seems Well Positioned for a Turnaround originally appeared on Fool.com and is written by Piyush Arora.

Piyush Arora has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads. Piyush is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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