re: BHP article in AFR
In the previous post I quoted figures used in the Courier Mail and here are figures according to AFR..
Currency losses to blight BHP Aug 5 Stewart Oldfield with Peter Klinger
Profit season 2002 gets into full swing this week. The highlight will be BHP Billiton as the world's biggest miner posts profits for its first full year as a merged company.
Weaker commodity prices and adverse currency movements are expected to take their toll on BHP Billiton's results, with brokers expecting the company to post an 8 per cent drop in full-year net profit.
The result will be released after the close of market trading on Wednesday and analysts forecast that it will fall in the $US1.8 billion to $US2 billion ($3.3 billion to $3.7 billion) range.
"BHP Billiton's fourth-quarter result should complete a solid foundation year as a merged company," Deutsche Bank said.
But the impact of gains in the Australian and South African currencies will cloud the result because BHP Billiton uses the US dollar as its functional currency.
Rival Rio Tinto also reports its group profit in US dollars, but the functional currency of its individual assets is the currency of the country in which the assets are located, cutting out the impact of the swings.
JB Were said the quality of the BHP Billiton result would need to be examined closely by investors.
"Net monetary liabilities and rand debt mask result clarity, making reconciliation difficult," the broker said.
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Analysts said they expected the company to outline measures to mitigate the impact of the non-cash translational losses due to foreign currency movements.
"This large movement quarter on quarter is ... a concern to the market and we would expect BHP Billiton to provide some guidance as to how they might look to mitigate them in the future," UBS Warburg said.
The first quarter of the 2003 financial year is expected to be impacted by the wild swings in the Brazilian currency.
Weaker commodity prices in BHP Billiton's key metal markets, stronger currencies and additional tax charges will contribute to an estimated 26 per cent slump in fourth-quarter profit to about $300million.
BHP Billiton's new chief executive, Brian Gilbertson, will present the result and meet a small number of major Sydney institutions on Thursday before flying to Britain to promote the result.
Over the year the company's earnings have been hit by an average 14 per cent drop in aluminium prices, an average 19 per cent slide in oil prices and a 12 per cent drop in copper prices.
Cheers later
BHP Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
