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BHP Billiton cautious on global economic recovery

Marius Kloppers,
CEO, BHP Billiton
Melbourne, Australia — MININGREVIEW.COM — 10 February 2010 – The world’s biggest mining company, BHP Billiton, remains "cautious" about the speed and strength of the global economic recovery across the developed world in the short term, despite the positive momentum in developing countries.
Making this statement after releasing the company’s financial statements here, CEO Marius Kloppers pointed out that the longer term outlook was still robust, however, driven by "the continued industrialisation and urbanisation of China and other developing economies.

BHP Billiton reported a 7% decline in first-half earnings before exceptional items, although net income more than doubled, when taking into account once-off accounting charges recorded in the year-earlier period.

The firm earned US$6.1-billion (R45.75 billion) in the six months ended 31December, compared with US$2.6-billion (R19.5 billion) a year ago, however, excluding exceptional items, profit slid to US$5.7 billion (R42.75 billion), from US$6.13-billion (R46 billion)  a year earlier, which was still above analyst forecasts, according to Reuters.

“Although markets improved compared with the previous six months, higher sales volumes for iron-ore, manganese and coal were offset by lower commodity prices in general compared with the same period a year earlier, coupled with a weak US dollar,” Kloppers said.

BHP Billiton believes commodity markets will continue to be largely dependent on Chinese and Indian demand, and it will be "critical" to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China in the short term.

BHP increased its interim dividend by 1c a share, to 42c a share, but Kloppers indicated that investors should not be looking for a share buyback in the near term, despite the firm’s strong cash flow and balance sheet.

“Our first objective is always to invest in our business,” he said. “We believe that we have got highly valuable growth options in the portfolio which will ultimately deliver a larger return to shareholders,” Kloppers added.