BHP Billiton (ASX: BHP) is a global leader in the resources industry, with a diversified portfolio of natural resources. The company's operations include: iron ore, coking and thermal coal, copper, zinc, oil & gas and diamonds.
BHP Billiton posts 62% H2 profit slump, expects commodity demand to strengthen over long term
The world’s largest miner BHP Billiton (LSE: BLT) revealed the exact impact the “rapidly deteriorating economy” has had on its operations in its full year report for the year ending June 30 2009. The group also repeated concerns over restocking activities in China, which the commodity sector heavily relied on during the economic downturn in the second half of 2008 and first half of 2009.
The plummeting demand for commodities sent BHP’s H2 profits down 62% to US$11.6 billion, while the company’s EBITDA (earnings before interest, tax, depreciation and amortisation) declined 21% to US$22.3 billion and revenues dipped 16% to US$50.2 billion.
Supplies were cut 5 to 25% year on year in H1 in view of the declining spot prices for BHP’s commodities, which fell 50 to 90% over the period, amid destocking in all markets.
The Melbourne-based company reiterated that China has been the most supportive market since the beginning of the economic crisis with the government pouring heavy investments into infrastructure, keeping the demand for raw materials at a high level.
However, the economic outlook remains mixed as the commodity restocking in China is “largely complete” and it’s hard to gauge the economic growth beyond the period of each stimulus program, said the company.
BHP further noted that many economies will improve output over the short term if the recent stabilisation persists, but midterm growth could be held back by structural economic problems. BHP still expects the demand for its commodities to grow over the long term.
The company raised the full year dividend 17% to US$0.82 per share.
BHP’s stock was down 1.3% on the London Stock Exchange this morning following the update.
