The world's largest miner, BHP Billiton, has posted annual underlying profit growth of 16% on the back of record volumes and robust earnings from its key iron ore and coking coal operations.
Annual underlying profit, which strips out exceptional items and gauges profit from operations, came in at $12.5 billion, up 16% from a year earlier and in line with Morningstar's forecast. The bulk of the company's exceptional or one-off items came from the sale of its Ravensthorpe nickel mine. Including one-off items, net profit landed at $12.7 billion--more than double the previous year's result.
BHP declared a dividend of 45 cents a share, up from 41 cents a year ago and topping Morningstar's forecast of 42 cents per share.
Earnings before interest and tax (EBIT) from BHP's mainstay iron ore, coking coal and manganese operations totalled $8.8 billion, nearly half of the company's group EBIT of $19.7 billion. Morningstar senior resources analyst Mark Taylor said iron ore, coking coal and manganese earnings beat his forecast. "Because it's such a big chunk of the lot, it has a substantial impact," Taylor said, adding that petroleum operations also beat his expectations.
"We've got a very impressive set of results which we're very proud to talk about," BHP Billiton chief executive Marius Kloppers said.
Going forward, BHP said it remains cautious on the short-term outlook for the global economy, while the short-term outlook for commodities is mixed. However, the miner said there is no change to its expectations for strong growth in demand for its commodities in the longer term.
A week ago, BHP unveiled a $39 billion hostile bid for PotashCorp. The Canadian takeover target swiftly rejected BHP's $130-a-share offer as inadequate. Read our analyst's take on the move in the recent article BHP Going to Pot of Ashing Competition.
BHP's Kloppers this morning reiterated the mining giant's commitment to maintaining a solid A credit rating--Morningstar's Taylor believes the proposed Potash price tag is a "digestible bite" for BHP.
This is a revised version of an article that first appeared on Morningstar Australasia.