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BHP Billiton profit meets forecasts

Nicholas Grove  |  24 Aug 2011Text size  Decrease  Increase  |  
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Nicholas Grove is a Morningstar journalist.


The world's biggest miner BHP Billiton (BHP) on Wednesday said its net profit for the year to 30 June 2011 was up 86 per cent to US$23.6 billion, as a result of record production, higher prices and strong demand from Chinese steelmakers.

Before one-off items, some of which relate to the company's bid for Potash Corp that was knocked back by the Canadian government, profit was up 74 per cent to US$21.7 billion.

The result was achieved on the back of a 36 per cent rise in revenue to US$71.7 billion, the company said.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the year were up 51 per cent to US$37.1 billion, with underlying EBIT up 62 per cent to US$32.0 billion.

Basic earnings per share before one-off items was up 75.6 per cent to 393.5 US cents.

The miner declared full-year dividends of 101 US cents a share, up 16.1 per cent from 87 US cents a share in the previous year. The final dividend was 55 US cents a share.

Net operating cashflow for the year was up 78.1 per cent to US$30 billion, BHP said.

Morningstar global head of basic materials, Mark Taylor, said the full-year result was "bang on" in line with his forecast for a profit of US$22 billion.

"The increase was predominantly driven by higher commodity prices, with adverse exchange rates a partial offset, and that was pretty much it," Taylor said.

"And within the commodity mix, the iron ore price was most important, followed by copper and oil," he said.

"In terms of divisional performances, I was probably surprised by how strong the petroleum performance was."

In a statement, BHP said it posted record production across four commodities and ten operations during the year.

"Robust demand, industry-wide cost pressures and persistent supply-side constraints continued to support the fundamentals for the majority of BHP Billiton's core commodities," the company said.

"In that context, another strong year of growth in Chinese crude steel production ensured steelmaking material prices were the major contributing factor to the US$17.2 billion price-related increase in underlying EBIT."

A weaker US dollar against producer currencies reduced underlying EBIT by US$2.5 billion, BHP said.

BHP said its net gearing stood at 9 per cent at the end of fiscal 2011, ensuring it has the capacity to comfortably fund its organic growth program and the US$15.1 billion acquisition of Petrohawk Energy that was announced back in July.

Despite the current global headwinds and its outlook for a protracted recovery in the developed economies, BHP said it remains positive on the longer-term outlook for the global economy.

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