BHP reports $13.7 billion profit August 22, 2007 - 4:34PM
BHP chief Chip Goodyear will walk away after guiding the company to another record profit. Photo: Glenn Hunt
BHP Billiton, the world's biggest mining company, said its annual profit rose 35 percent to $13.7 billion, another record, and say the global economy remains robust.
BHP said full-year net profit before one-offs for the year to June 30 was a record $13.7 billion, up from $10.15 billion a year earlier, on strong sales of industrial minerals such as copper, iron ore, coal and petroleum products.
Reported net profit including one-offs was $13.42 billion - which was actually short of analyst expectations.
The mining giant also declared a dividend of 27 US cents, taking total for the year to 47 cents, up 30.6 per cent from fiscal 2006.
While commodity prices are likely to stay relatively high, the company also says labour markets remain constrained and that wages are rising.
"The global economy remains robust, driven by solid activity in Asia and Europe," BHP Billiton said.
"Economic fundamentals remain relatively strong.
"Unemployment remains low and the supply of labour is still constrained.
"This is resulting in rising wages and increased household consumption."
BHP Billiton said Asian economies, led by China, continue to demonstrate growth, with India's economy continuing to gather pace.
"In Europe, solid growth is being supported by accommodative monetary conditions, rebounding consumption and strong German industrial activity," BHP Billiton said.
"The US economy continues to soften, with the housing sector acting as a drag on activity.
"The Japanese household sector is also experiencing weakness, increasing risks of deflation later in the year."
It also said that the rate of growth in the Chinese economy shows no sign of abating, with economic growth expected to be maintained or perhaps accelerate over the second half of calendar 2007.
"Despite moderating US economic growth, global economic fundamentals remain strong and the ongoing strength shown by emerging Asian economies (including China) should support global growth," the miner said.
"Moreover, the competitiveness of open Asian economies is likely to continue to place downward pressure on inflation, which should in turn provide greater flexibility for accommodative monetary policy stances taken by key central banks."
"The bottom line number was almost identical to what we had and all the individual business group EBITs were extremely close to our expectations, so we'd have to rate it as a pretty strong result," said JP Morgan analyst, David George.
"Their outlook reinforced what they have been saying in recent commentary. We are going into a growth phase at BHP Billiton in terms of petroleum, copper, nickel and this is just reminding everyone that it's coming.
"Their performance on costs was very good. They seem to be managing the costs very well in this period of fairly strong pressures.''
"The net profit before exceptional items was within range of expectations and the final dividend of 27 cents is probably above analysts' forecast," said FW Holst's Rob Craigie.
"The net non-cash cost increase of only 3 percent is encouraging and it confirms the declining trend of cost increases which BHP has highlighted in previous briefings.''
BHP Billiton shares ended 0.3 percent lower at $35.40. The results came out just minutes before the close.
BHP's Australian-listed shares have risen about 40 percent this year, outpacing a 5.7 percent increase in the benchmark S&P/ASX 200 index in the same period.
Rival Rio Tinto posted a 6 percent decline in its January-June profit earlier this month as increased costs undermined rising prices and strong demand.
Ends.
Cheers, Pie :-)
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