BHP Billiton profits up 63 per cent

23-08-2006

BHP Billiton, the world's largest mining company has reported a massive 63 per cent rise in full-year profits, with strong metal prices and high demand for commodities fuelling the company's strong performance.

The Anglo-Australian firm said that attributable profit in the year to June 30th was $10.45 billion (£5.54 billon), up from $6.4 billion a year ago.

The company, which plans to make a $3 billion return to its shareholders, reported record annual production levels for aluminium, copper, iron ore, nickel and natural gas amid strong demand for metals in the increasingly industrialised Chinese market and the United States.

BHP Billiton said that increased sales of copper, iron ore, diamonds and molybdenum from existing operations contributed around $304 million to underlying profits before tax.

The mining company said that stronger commodity prices for most products had increased underlying profits before tax by $6,690 million, with higher prices for most base metal products, especially copper, contributing around $7,200 million.

However, while growing global demand for commodities has benefited the company, it has also led to increased costs. BHP Billiton said that the growing cost of hiring labour, contractors, raw materials, fuel and other input costs had increased the group's total overheads by $1,340 million.

The mining company said that the global economic outlook remained positive, while stressing that rates of growth were likely to slow as a result of increased energy prices and rising interest rates.

"Growth in Asia will help drive the global economy, with Japan’s expansion well-established," said BHP Billiton in a statement accompanying its results.

"China’s economic growth is expected to remain strong, even if attempts to cool strong growth are successful."

"Elsewhere, the US economy will slow from rapid growth experienced earlier in the year, but is likely to remain at levels consistent with long-term trends."

While the outlook for the company remains strong given current global conditions, BHP Billiton shares fell two per cent in London trading following the publication of its results, which analysts stressed were in line with expectations.

"They have filled a lot of their own rhetoric, they are very good at that," JP Morgan mining analyst Ross Gardiner told the Reuters news agency.

"There is nothing here that goes outside what is expected," he added.






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