(Reuters) - Global miner BHP Billiton Ltd (AX:BHP) posted record iron ore output for fiscal 2018 on Wednesday as fourth-quarter production topped expectations and set a slightly higher target for the current year.
Shares in the miner jumped more than 3 percent after both quarterly and full-year production rose 3 percent on improved productivity.
"BHP's FY18 production was in line with or slightly better than our expectations in all major segments," Jefferies said in a report.
"We maintain our Hold rating on BHP shares, but we have become more constructive due to recent strong operational performance and a reduced valuation," it said, adding that it expects a $2 billion-plus share buyback when BHP reports financial results next month.
Iron ore output at the world's biggest miner rose to 72 million tonnes during the three months through June, compared with 70 million tonnes a year ago.
Full-year production came in at 275 million tonnes. BHP set a fiscal 2019 production target of 273-283 million tonnes.
"We have delivered a strong finish to the 2018 financial year with an 8 per cent increase in annual production and record output at Western Australia Iron Ore, Queensland Coal and at our Spence copper mine in Chile," BHP Chief Executive Andrew Mackenzie said.
BHP also said that it expects to record a charge of $650 million in its fiscal 2018 results following the 2015 Samarco dam failure in Brazil that killed 19 people.
The charge was at the low end of expectations, analysts said.
"The hit they have taken is at the lesser end of the scale, which could also be the reason why the stock is performing well today," said Christopher Conway, head of research and trading at Australian Stock Report.
BHP shares rose 3.2 percent by 0244 GMT, around the middle of its trading range over the past two months after a strong run-up earlier in the year.
BHP also said that its plan to divest its underperforming U.S. shale oil and gas business is on track, and added that it expects to announce one or more transactions in coming months for a complete exit by the end of 2018.
The race for BHP's onshore shale assets in the Eagle Ford, Permian, Haynesville and Fayetteville basins, is being led by British oil giant BP Plc (L:BP) which made an offer worth well in excess of $10 billion, people familiar with the matter told Reuters in June.
In a key area the company has targeted for growth, BHP said it had increased its stake to 50 percent in the Samurai prospect in the U.S. Gulf of Mexico, where recent drilling found hydrocarbons "in multiple horizons", which had not been found in a previous exploration well in the area.
