Global mining and oil & gas giant BHP Billiton announced $10.5 billion profits for the final six months of 2010, a 71.5 per cent increase on the previous year. Half yearly revenue rose 39 percent to $34.1 billion.
The company achieved half-yearly production records across three commodities and five businesses, according to the company’s statement. Record iron ore shipments reflected the ongoing ramp up of BHP’s Western Australia Iron Ore projects, which when combined with record performance at Samarco (Brazil), increased underlying EBIT by $99 million in the December 2010 half year.
In the base metals business, higher grades at Cannington (Australia) and record milling and ore hoisting rates at Olympic Dam (Australia) contributed to a $138 million volume related increase in underlying EBIT for the period.
The deferral of production well drilling in the Gulf of Mexico was a major constraint, however, with base volumes down in the December 2010 half year.No permits were issued in the Gulf of Mexico for production drilling in the six months to 31 December, but BHP Billiton was one of the first operators to return both of its deepwater rigs to (water injection) drilling operations.
Also in this period, BHP Billiton withdrew its offer for Potash Corporation of Saskatchewan on 15 November 2010, after concluding that the condition of the offer relating to receipt of a net benefit under the Investment Canada Act could not be satisfied. The Group incurred fees which were expensed as operating costs in the half year ended 31 December 2010.
The results have allowed BHP to increase its interim dividend by 10 percent to $0.46 cents per share.
BHP Billiton went on to say that its investment in organic growth is expected to exceed $80 billion over the five years to the end of the 2015 financial year. Some major projects in iron ore and metallurgical coal are at an advanced stage of the approvals process and should result in a substantial increase in project capital expenditure, the company said.
Looking ahead, BHP said it is “cautiously optimistic” about the short term outlook for 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 United States.
The company observed that global industrial production, retail sales and consumer confidence had improved throughout the last quarter with the United States and the two largest European economies (Germany and France) experiencing broad based growth.
The majority of BHP Billiton’s core commodities experienced increases in prices during the December 2010 half year, driven by a combination of robust emerging market demand, stronger than expected developed market growth and ongoing supply constraints.
BHP Billiton expects demand for its commodities to remain strong, with emerging markets being the principal drivers of growth.
