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BHP Billiton Profits up 72% on Surging Demand
Talek Harris | February 16, 2011

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The world's top miner BHP Billiton Wednesday said half-year profits surged 72 percent to US$10.52 billion as emerging markets snap up raw materials and the West edges out of its economic slump.

BHP, which was foiled in takeover plans for Canadian fertilizer giant Potash Corp. and an Australian iron ore merger with arch-rival Rio Tinto, also said it would buy back US$10 billion in its shares this year.

Chief executive Marius Kloppers said the results had been achieved despite BP's major oil spill in the Gulf of Mexico and flood disasters, including widespread inundations in northeastern Australia.

"We are proud of the results, despite things like the Gulf of Mexico events and floods around the world," Kloppers told a media briefing.

"The portfolio has shown that it performs at record margins, almost record cash flow, and we have done that in a manner which has been safe.

"We're very pleased with what opportunities the market has afforded us and how we have responded to them."

BHP said supply problems had buoyed prices for its products, which notably include coal and iron ore bound for industrialising Asia's steel mills, while its Western Australian iron ore shipments set a new record.

It said operating cash flow was at US$12.2 billion, while shareholders would receive an improved interim dividend of 46 US cents.

"An improving economic backdrop and broader supply constraints continued to support the fundamentals for the majority of BHP Billiton?s core commodities," BHP said in a statement.

BHP also said it was "cautiously optimistic" about the global economy "given the continuation of robust growth in emerging markets and further positive signs of a sustainable recovery in major developed economies such as the US".

But the company added sovereign debt problems and growing inflation in Asia remained significant risks to future growth.

BHP said revenue for the final six months of 2010 was up 39 percent to US$34.17 billion, adding that it planned to spend US$80 billion on organic growth over the next five years.

The results come despite a rocketing Australian dollar, which pared profits, and follow two major setbacks in BHP's acquisition programme.

In October, BHP and Rio abandoned a merger of their Australian iron ore operations after anti-competition complaints from regulators and top customers including China.

Just a month later, BHP abandoned a US$39 billion hostile bid for Potash, the world's leading fertilizer-maker, after Canada's government ruled it was unlikely to benefit the country.

Last week Rio said annual profits had almost tripled on the back of booming commodities prices and rapid growth in emerging markets, underlining a halcyon period for mining companies.

"I would say that for the industry as a whole, the conditions over the past six months have been particularly good," Kloppers said.

AFP