BHP Billiton profit rockets 83% on huge demand for metals
August 19, 2004
By Nicky Smith
Johannesburg - "People who used to be in the internet business are now getting into the mining business," Chip Goodyear, the chief executive of the world's largest resources firm, BHP Billiton, said at the year-end results presentation, which showed record growth and profits.
Turnover for the group was up 43 percent to $24.9 billion (R162 billion), while attributable profit shot up a staggering 83 percent to $3.5 billion for the year to end June.
South African investors hold 10 percent of the group, which has 20 percent of its assets in the country. Its South African operations contributed 8 percent to BHP Billiton's earnings before interest and tax.
The group reported record production in most of its commodity groups at a time when commodity prices are climbing on insatiable demand.
The stellar operational performance did not rely on the group's oil, gas and coal division as may be expected.
The contribution from its energy assets on an earnings before interest and tax basis shrank from 31 percent in financial 2003 to 25 percent for its financial year 2004.
The huge shift in contribution came from its base metals division, which is essentially copper. The division's contribution rose to 20 percent from 8 percent last year.
"It is difficult to talk about our business without talking about China. Demand for natural resources in China is not a short-term phenomenon ... this is a major structural change," Goodyear said.
Sales to China doubled last year but still only account for 10 percent of BHP Billiton's sales. Prices for metals such as nickel and copper have soared on China's demand for commodities.
Copper prices were 56 percent higher than last year, nickel was up about 50 percent and stainless steel product prices were nearly 60 percent.
The aluminium division and carbon steel division were hit by a firm rand.
Daniel Sacks, a fund manager with Investec Asset management, said the results had been "bang in line" with expectations.
"The earnings growth story is certainly not over. This earnings growth came from high-quality divisions all working together.
It's very hard to find any kind of fault with the results. We like it," he said.
The shares closed R1.40 weaker at R61.30 yesterday as the other mineral extractors sector fell 1.16 percent.
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