Record BHP profit expected August 18, 2006 01:00pmSource:...

Record BHP profit expected
August 18, 2006 01:00pm
Source: news.com.au/business

BHP Billiton Ltd is set to shatter its own record when it reports Australia's biggest ever annual profit next week, as earnings tread the same upward path as commodity prices.

BHP Billiton is expected to unveil a $US10 billion ($A13.16 billion) net profit for 2005/06 on Wednesday, easily beating the record for an Australian corporate profit it set a year ago.
As profits rise and cash accumulates, investors are weighing the possibility of further share buybacks or even a special dividend.

Analysts expect the metals miner and oil producer to post a net profit of $US10.118 billion ($A13.19 billion) for 2005/06, up from $US6.426 billion ($A8.37 billion) in 2004/05, as restated under new accounting standards.

A range of over 20 forecasts compiled by the company starts at $US9.726 billion ($A12.67 billion) and reaches $US10.557 billion ($A13.76 billion).

Underlying earnings before interest and tax (EBIT) are expected to reach $US15.116 billion ($A19.7 billion), from $US9.921 billion ($A12.93 billion) the previous year, with a forecast range of $US13.949 billion ($A18.18 billion) to $US15.899 billion ($A20.72 billion).

The earnings will be supported by record annual production in aluminium, copper, iron ore, nickel and natural gas.

But annual crude oil production sank 10 per cent during the year, impacted by an extremely active hurricane and cyclone season in the United States and Australia, leaving total petroleum product output unchanged.

The market will be watching for any further guidance on petroleum production in the current year, with BHP Billiton indicating at the time of its annual production report that 2006/07 levels are again expected to unchanged.

Higher commodity prices will likely offset a rise in many costs, from fuel to labour.