By Rebecca Keenan and Jesse Riseborough Feb. 10 (Bloomberg) — BHP Billiton Ltd. , the world’s largest mining company, said first-half profit more than doubled, beating analyst expectations as demand for commodities surged in China and India. Net income was $6.1 billion, or 109.8 cents a share, in the six months ended Dec. 31, from $2.6 billion, or 47 cents a share, a year earlier, Melbourne-based BHP said today in a statement. That compares with the $5.5 billion median estimate of eight analysts surveyed by Bloomberg News. Global economic conditions have improved over the past six months as the United States and Europe lifted industrial output and China returned to double digit growth, BHP said today. Xstrata Plc reinstated its dividend this week and said the outlook for commodities demand was “very promising.” “Mining companies are on a much firmer footing than what they were last year,” said Tim Schroeders , who helps manage $1.1 billion at Pengana Capital Ltd. including BHP shares. “Overall, an excellent result and cash-flow wise it was at the top end of expectations.” BHP shares rose 3.2 percent to A$41.11 at 10:01 a.m. Sydney time. They gained 24 percent for the half-year ended Dec. 31. The company approved a $1.93 billion iron ore expansion last month after reporting a strong recovery in the fourth quarter in commodity prices, driven by China. Citigroup Inc. commodity analyst Alan Heap said last week demand may turn positive in coming months. Global Conditions “Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.” Chinese regulators, aiming to stem rising inflationary pressures, moved last month to slow a credit boom with measures to restrict lending. Their efforts to stem inflationary pressures came as the nation’s economic growth accelerated to a 10.7 percent year-on-year pace in the last three months of 2009. China is the world’s largest consumer of all industrial metals. BHP will pay a first-half dividend of 42 cents, up from 41 cents a year earlier. That’s lower than the projected dividend of 44 cents, according to Bloomberg data. BHP booked $2.7 billion in charges in the first half of 2009 after metal prices slid because of the global financial crisis. Cash Flow First-half sales decreased 18 percent to $24.6 billion, the company said in the statement. Profit, excluding one-time items, fell 7 percent to $5.7 billion. That compares with the $5.1 billion average of 20 analyst estimates supplied by BHP. Cash flow from operations fell 56 percent to $5.7 billion. The weaker dollar against BHP’s main operating currencies cut underlying earnings by $1.5 billion, the company said. The Australian dollar averaged 87 cents in the first half, compared with 78 cents a year earlier, it said. Underlying earnings before interest and tax at BHP’s iron unit dropped 50 percent to $2.09 billion after the global recession forced miners to slash prices by 33 percent in 2009, the first reduction in seven years. The unit was last year the company’s biggest earner and has now become the third-biggest behind base metals and petroleum. BHP’s output of ore increased 6 percent to a record 62.5 million metric tons. Contract prices may climb 31 percent to the second highest on record for the year starting April 1, according to the mean estimate of 17 analysts surveyed by Bloomberg last month. The demand revival will benefit BHP, Rio Tinto Group and Vale SA, the three largest suppliers of iron ore. Rio and BHP in December agreed to an Australian iron ore joint venture that they say will save them at least $10 billion. The plan, announced in June, will combine mines, rail, ports and workforces in the Pilbara region. The venture is expected to be completed in the second half, Rio said last month. The year-earlier charges included costs for closing the Ravensthorpe nickel mine in Western Australia and the Pinto Valley copper plant in the U.S. as well as for abandoning the proposed Rio Tinto takeover. To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net Jesse Riseborough in Melbourne at jriseborough@bloomberg.net .
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BHP Billiton’s First-Half Net Income More Than Doubles, Beating Estimates
