BHP Billiton profit falls 30pc

August 12, 2009

, MELBOURNE, Aug 12 – The world\’s biggest miner BHP Billiton on Wednesday said annual profits fell 30.2 percent as commodities demand slumped, ending a seven-year run of record results but still beating market forecasts.

Net profit for the 12 months to June was 10.72 billion US dollars excluding one-off items, down 4.67 billion on the previous year as the China-driven resources boom slowed.

While the result narrowly bettered the 10.2 billion dollars predicted by analysts, profits including exceptional items plunged 61.8 percent to 5.877 billion dollars.

BHP said it had seen a collapse in demand for commodities early in the year as the world economy slowed, partially offset by government stimulus measures including China\’s massive four-trillion-yuan (585 billion dollars) package.

The Anglo-Australian company described the profit as "a strong financial result" in the circumstances, with chief executive Marius Kloppers expressing cautious optimism that markets were improving.

Kloppers said developed countries such as the European Union, Japan and the United States appeared to be stabilising and were re-stocking their commodities supplies.

In China, he said the stimulus measures had increased short-term demand and BHP was confident about the Asian giant\’s prospects over the longer term.

"Our basic premise is that China continues to have materials-intensive growth over many decades to come," he told reporters.

Bell Direct analyst Julia Lee said investors would welcome the better-than-expected result and encouraging outlook.

"It does look like the outlook statement has been quite positive, saying that they are going to bounce back in countries a lot sooner than expected, especially in emerging markets," she told Sky Business.

BHP Billiton, created through the 2001 merger of Australia\’s BHP and London-based Billiton, has more than 40,000 employees working in 25 countries.

It has more than 100 operations across a range of resources products, including coal, iron ore, uranium, petroleum, nickel, copper, silver and diamonds.

BHP\’s revenues fell 15.6 percent to 50.21 billion dollars over the year, with earnings before interest and taxes down 25 percent to 22.28 billion on the back of lower prices for crude oil, copper, nickel, aluminium and alumina.

Operating cash flow stood at a record 18.9 billion dollars.

Iron ore was the best performing division, recording a 34.5 percent rise in earnings to 6.23 billion dollars, while aluminium earnings slumped 86.9 percent to 192 million.

IG markets analyst Cameron Peacock said BHP\’s diversity had helped it outperform its rivals during the global downturn.

"To produce a record net operating cash flow of 18.9 billion dollars against the backdrop of the global financial crisis is certainly impressive and demonstrates the true resilience of the company’s financial strength," he said.

Just before the announcement, BHP\’s share price closed up 39 cents at 37.99 dollars (31.53 US) on the Australian stock exchange.

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