BHP Billiton profits at record $13.7bn as commodities boom

BHP Billiton has announced record results for the fourth year running, despite a dip in global commodity prices in recent weeks which the world's largest mining company blamed on credit turmoil. Chip Goodyear, chief executive, said yesterday that BHP believed volatility in the commodity markets would be short-term, with robust Chinese demand for resources continuing. BHP's full-year profits rose 35 per cent to $13.7bn over the 12 months to the end of June. Mr Goodyear, who is due to hand over the reins at BHP to Marius Klopper next month, said the miner was forecasting "significant" volume growth in all sectors through 2008, with copper, iron ore and nickel expected to be particularly strong. Keith Bowman, an analyst with the broker Hargreaves Lansdowne, said: "It looks like a solid set of numbers, slightly exceeding the market's - and our - expectations. This sends a strong message to the market that the company has a robust long-term outlook." The world's most diverse resource company was created in 2001 by the merger of the Australian mining group BHP and the UK's Billiton. It is listed in Melbourne, Johannesburg and London, and is made up of more than 100 separate mining operations, including coal, petroleum, diamonds and aluminium, employing 38,000. Mr Goodyear said that while difficulties in world credit markets could lead to further volatility for commodity prices, there was no reason to expect a drop in demand for raw materials. BHP believes that falls in commodity prices this summer have been caused by US hedge funds selling stockpiles to raise liquidity. "Despite moderating US economic growth, global economic fundamentals remain strong," Mr Goodyear said. "Ongoing strength shown by emerging Asian economies, including China, should support global growth." BHP supplies roughly 20 per cent of its production to China, but said the outlook remained positive. "Recent discussions with our customers in China and India have indicated that credit market volatility will not have a material impact on their raw material demand," Mr Goodyear added. "Our customers believe domestic supply and demand criteria are much more important factors." BHP declined to comment on speculation that it was considering a bid for the US aluminium group Alcoa, which follows the purchase of Alcan by its rival Rio Tinto. Mr Goodyear said that while the company was "delivering more cash than we can use in the business, for the moment we will be returning it to shareholders." The company is halfway through a $13bn share buy-back programme and yesterday announced a 30.6 per cent increase in total dividend for the year, to $0.47. BHP has 33 projects in development, including plans to extend its Olympic Dam operation in Australia, reputed to be the largest uranium and base-metals resource in the world. Production at the site was reduced earlier in the year due to a smelter meltdown.