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Annual production records in seven commodities and increased production in a further six saw the world's largest miner, BHP Billiton, announce its seventh consecutive year of record profits and thirteenth consecutive dividend increase.
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Higher sales volumes added $0.8bn to profits, but this was dwarfed by the contribution from rising prices - in particular for base metals, iron ore, manganese and thermal coal - which swelled profits by $6.7bn. Newly commissioned projects and record oil prices similarly boosted petroleum earnings, but group expenditure increased by $1.2bn, mainly due to the rising cost of diesel, coke and explosives, and skilled labour shortages.
Gross exploration expenditure totalled $1.4bn, which underpinned significant resource increases in iron ore and manganese and saw the discovery of the Pampa Escondida copper prospect in Chile. The group expects strong demand from emerging economies to outweigh current softness in developed economies.
The board continues to see a merger with Rio Tinto as the long-term route to reducing costs, raising efficiency and deploying scarce resources to the highest value opportunities. Prior to these results, broker Evolution expected 2009 underlying pre-tax profits of $34.1bn and EPS of 438¢ (from $24.1bn and 289¢ this year).
| BHP BILLITON (BLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,542p | MARKET VALUE: | £94.6bn* | |
| TOUCH: | 1,541-1,542p | 12-MONTH HIGH: | 2,196p | LOW: 1,183p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 689¢* | NET DEBT: | 22% | |
| Year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2004 | 22.9 | 4.5 | 54 | 26.0 |
| 2005 | 31.2 | 8.9 | 104 | 28.0 |
| 2006 | 34.1 | 15.1 | 173 | 36.0 |
| 2007 | 41.3 | 19.2 | 230 | 47.0 |
| 2008 | 51.9 | 23.5 | 275 | 70.0 |
| % change | +26 | +22 | +20 | +49 |
Ex-div:03 Sep Payment:25 Sep *NAV and market cap include BHP Billiton plc (UK) and BHP Billiton Ltd (Aus) shares £1=$1.8676 |
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The merger saga overshadows another impressive set of results and, with an increased and dilutive offer looking necessary to secure a deal, the shares remain high enough.
Last IC view: High enough, 1,526p, 6 February 2008
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