BHP set to use 40pc profits rise to boost argument for Rio Tinto

BHP Billiton will set down a marker in its battle for rival miner Rio Tinto tomorrow when it posts full-year results expected to show a 40pc increase in pre-tax profits. BHP is the first group to post its figures as the earnings season for miners begins in earnest. The company is expected to have seen profits jump to record levels of more than $24bn (£13bn) on revenues 25pc higher at $58.5bn. The company, led by chief executive Marius Kloppers, is expected to boast a strong performance in its petroleum division, which is likely to account for more than 20pc of total earnings - up from 15pc last time as BHP benefits from oil price rises. BHP has pointed to the division as a key differentiator in its hostile takeover approach to Rio Tinto. It argues that its oil and gas business is faster growing and enjoys far higher margins than Rio's point of difference - its aluminium business. Rio, however, argues that the market for aluminium is one of the strongest in the commodity sector, and it too is expected to post record profits when it reports a week tomorrow. Both miners have benefited from soaring prices for copper and iron ore in particular. Both companies are also likely to outline big expansions in those key sectors where analysts predict still higher prices next year on the back of strong demand for imported raw materials from China's industrial sector. Both Rio and BHP are expected to use their results to bolster their respective arguments in the bitter takeover battle. Rio has argued that the strength of its pipeline and the strong aluminium price means it has far greater growth prospects than its predator, and some analysts believe that could result in BHP being forced to increase its offer. --www.telegraph.co.uk