Vancouver – Despite a drop in sales, Australia-based BHP Billiton (BHP-N) saw profits rise to US$1.9 billion, or US$0.31 per share in the fiscal year ended June 30, 2003.
This marks a significant increase from the US$1.69 billion, or US$0.28 per share tallied in 2002. However, sales fell to US$17.51 billion, down from $17.78 billion reported last year. Profit from continuing operations before exceptional items rose 2.9% to US$1.92 billion from $1.87 billion a year ago. Cash flow came in at a steady US$3.59 billion.
Earnings before interest and tax came in at US$3.48 billion, up from US$3.1 billion in the previous year. The increase is the results of higher volumes, up by US$235 million; higher prices, up by US$545 million and US$360 million in cost savings. The petroleum group contributed $1.18 billion of the earnings, up from US$1.07 billion recorded last year, while aluminum operations added US$581 million, up from US$492 million last year. The diamond and specialty products division generated US$370 million, up from US$342 million a year ago. However,
The base metals division showed the best improvement, adding US$286 million in earnings (before interest and taxes) to the company’s total, up some 49% over last year’s total of US$192 million.
Dragging down the bottom line was coal products, which generated US$190 million in earnings, down from the US$536 million tallied last year.
Driving the earnings growth was strong demand from China. The company’s direct sales to world’s most populous nation jumped by 120% to US$1.2 billion and accounted for 7% of the total turnover of US$17.5 billion. China accounted for 32% of the group’s iron ore turnover.
“Looking forward in China, we are getting increasingly confident that there is sustainability to these things,” says company Chief Executive officer, Chip Goodyear. “It won’t be a straight line up in China, there will be bumps and bruises and changes along the way, but we are seeing continued encouraging signs of activity there.”
Overall, the diversified miner states: “The outlook for other key commodity markets remains fragile, although there are some promising early signs that the more expansionary fiscal policies in some markets are starting to create increased demand for our products.”
On the copper front, the major is looking into the prospects of restarting some of its stalled production capacity implemented in the wake of slowing demand.
“We continue to monitor the situation at Escondida,” adds Goodyear “Inventories have been dropping in copper … but what we’d like to see is fundamental demand growth.”
The Melbourne-based company also managed to reduce its debt during the course of the year to US$5.77 billion, from $7.3 billion some 2 years ago at the time of the original merger of BHP and Billiton.