BHP Billiton falls short on profit
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Christine St Anne is Morningstar's online editor.
BHP Billiton (BHP) on Wednesday announced a net profit of US$15.4 billion for fiscal 2012, down 35 per cent on the prior year.
The profit announcement was short of Morningstar's forecast of US$19.7 billion and consensus estimates of US$16.8 billion.
The company also announced it would delay the expansion of its Olympic Dam project because of current market conditions, including subdued commodity prices and higher capital costs.
Full-year dividends of 112 US cents a share fully franked were declared. This represents an 11 per cent increase in dividend payments for fiscal 2012.
Morningstar sector head of of basic materials, energy and utilities, Mark Taylor, said dividends were a "bit soft".
"Given their considerable cuts to capital expansion, the market expected dividends to lift. The dividend announcement, however, was in keeping with the company's progressive dividend policy," he said.
Revenue for the diversified miner increased slightly by 0.7 per cent to $72.2 billion.
Key sectors perform but coal disappoints
Taylor said the metallurgical coal production numbers were disappointing.
A modest increase in metallurgical coal production was achieved for fiscal 2012, however, underlying earnings before interest and tax (EBIT) for the 2012 fiscal year decreased by 41.2 per cent to US$1.6 billion.
Taylor said weather-related issues and industrial action impacted the production numbers.
BHP said the integration and development of its onshore US shale liquids and gas assets contributed to a 40 per cent increase in petroleum production for fiscal 2012.
The iron ore business delivered itstwelfth consecutive annual production record, with West Australian iron ore shipments rising to an annualised rate of 179 million tonnes in the June 2012 quarter.
Strong momentum also continued for BHP's base metals business for the June 2012 quarter. Escondida copper production increased by 22 per cent from the March 2012 quarter, but declined marginally in the 2012 fiscal year as lower grades and industrial action impacted performance at the mine.
Material items for the year included an impairment of the US dry gas assets bought from Chesapeake Energy last year, an impairment of the Nickel West assets in Australia and a US$342-million charge for the suspension of early closure of operations and the change in status of specific projects, which included an impairment of the Olympic Dam project in Australia.
Despite the large write-downs, gearing is still at 35 per cent.