Connect with us

Hi, what are you looking for?


BHP cautious despite good profits

SYDNEY, Feb 10 – The world\’s biggest miner BHP Billiton fired a warning over the economic recovery on Wednesday despite smashing forecasts with half-year profits of 6.14 billion US dollars.

BHP said the global economy had hauled itself out of the doldrums of the financial crisis but cautioned that advanced countries were expected to lag growth in the developing world.

First-half profits to December more than doubled — up 134 percent — from the 2.62 billion US dollars recorded a year earlier, as emergency government stimulus prompted a recovery in demand.

"We remain cautious about the speed and strength of the global economic recovery across the developed world despite the positive momentum in the developed countries," chief executive Marius Kloppers told reporters.

BHP said strong sales volume growth had boosted its bottom line along with December\’s 340 million US dollar sale of the Ravensthorpe mine in Western Australia, the source of a goodwill impairment charge in 2008.

Profit excluding exceptional items fell seven percent to 5.7 billion US dollars. BHP announced a dividend of 42 US cents per share, up 2.4 percent on a year earlier.

"Given the volatility that we had in the 12 months preceding, we are very pleased with these results," Kloppers said.

BHP said global conditions had improved with the United States and Europe lifting their dismal industrial output while China returned to double-digit growth and India proved resilient.

It said it would keep a close eye on China\’s credit-tightening and noted that many of its orders came from restocking, warning that "real end demand still appears sporadic".

Advertisement. Scroll to continue reading.

"Notwithstanding our caution in the short term, over the long term we continue to expect emerging economies\’ growth to strongly outperform the developed countries as they follow a path of continued urbanisation and industrialisation," BHP said.

"Any effects on commodity demand due to potential weakness in developed countries are likely to be offset over time by continuing growth as China and India urbanise and industrialise," it added.

Kloppers said demand for key steelmaking material iron ore was extremely strong, particularly from China, with prices on the spot market currently almost double the contracted benchmark price.

"That would indicate that there is extremely strong demand on the back of China\’s iron ore imports surprising everybody to the upside in the last six months," he said.

Kloppers refused to comment on the benchmark price negotiations.

But he said: "I always point people back to where is the market today as the best indicator of what the supply demand is, and as the best indicator of what expectations should be on where prices are heading."

IG Markets research analyst Ben Potter said the profit announcement had "obliterated expectations".

"The comment that \’supply may struggle to keep pace with demand\’ will garner a lot of attention as it bodes well for higher sustainable commodity prices," he said.

"Also, the fact that the result was driven by higher volumes as opposed to higher prices should please the market."

Advertisement. Scroll to continue reading.

Dual-listed BHP closed at 39.88 dollars in Sydney, a rise of 0.80, after climbing as high as 41.24 dollars after the announcement.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...