BHP Billiton first half profit to fall 13pc: UBS

UBS says it expects BHP Billiton's 2010 first half net profit to be down 13 per cent on year to US$5.3 billion ($6.1bn).

This is still 16 per cent higher than 2H09 and UBS said petroleum, aluminium and the base metals division are expected to lead the recovery.

The bank said BHP's strong cash position means it may be considering capital management.

"We believe that BHP may announce a resumption of capital returns at the interim result given: the deferral of the iron ore joint venture balance payment to Rio (RIO.AU) to the second half of CY2010, and better prices and outlook for commodities," said UBS.

The bank said BHP remains its preferred diversified resource stock in Australia due to the potential for capital returns, better three year EPS growth forecasts and cheaper multiples.

UBS maintained its buy rating with a $48 target price. The stock last traded at $39.55.