xjo, page-11

Couldn't help myself

BHP Billiton announces record profit

By MIKE CORDER
ASSOCIATED PRESS WRITER

SYDNEY, Australia -- Anglo-Australian resources group BHP Billiton announced record full-year net profit of $6.398 billion, up 89.3 percent from $3.379 billion a year earlier, based on strong demand from China and soaring prices for its raw materials.

The profit in the year ended June 30, 2005, a corporate record in Australia, was struck on a 27.5 percent increase in sales to $31.8 billion. Excluding one-off items, the profit was $6.5 billion.

BHP Billiton, which is listed on the Australian and British stock exchanges, employs some 35,000 people in 20 countries around the world.

The company was formed by the 2001 merger of Australia's BHP and British-based Billiton.

Investors were unimpressed at the record result - which smashed the corporate record set by BHP Billiton's profit last year - and BHP Billiton's share price in Australia plunged 2.4 percent in trading shortly after the results to $15.44.



Chief Executive Chip Goodyear said demand is rising aggressively for key commodities such as iron ore and coking coal.

Iron ore prices are moving higher in China and elsewhere, he said, while coking coal prices are holding with some slight fall in the spot price of late.

"We are in a situation where generally demand is quite strong, and supply response is limited, and the speed of that is also restricted," Goodyear said, referring to the outlook for iron ore and coking coal.

"We have been very aggressive, as some of our competitors have been, but demand is continuing to rise quite aggressively," he said.

Exceptional items included profits from petroleum and chrome asset sales, offset by negative items including a $266 million charge relating to permanent closure of the Boodarie Iron plant in Western Australia.

BHP's profit was led by carbon steel materials, where operating earnings rose 148 percent to $2.82 billion, buoyed by high iron ore and coking coal prices.

Production also was up as the mines worked to cash in on high prices and demand for raw materials.

Base metals also boomed, with operating profit rising 88.3 percent to $2.18 billion as the unit benefited from high copper prices.

The oil and gas unit was buoyed by high prices, with operating income up 31.6 percent to $1.83 billion.

Looking ahead, the company said in a statement that commodity prices will inevitably "ease from their highs as demand growth slows and new supply comes on stream although we continue to expect prices to remain high by recent historical standards".

Emerging economies remain "buoyant", leading to an expected above trend global growth rate this year, the company said.