China demand boosts BHP profit

MELBOURNE: BHP Billiton Ltd/Plc, the world’s largest diversified mining company, has reported yesterday a 30% jump in its first-half profit, driven by surging sales in China and rising metal prices. 

The result was at the top of analysts' expectations, with a big increase in contributions from base metals and stainless steel materials as copper and nickel prices soared to multi-year highs. 

BHP Billiton said it would accelerate smaller-scale expansions and bring forward bigger projects for commodities in demand, as it was seeing strong orders for its products and a continued recovery in global economies. 

Analysts said the results reflected a better-than-expected improvement in price rises and the miner was poised for an exceptional 2004/05 off the back of continued demand in China, which made up 10% of the group’s 1st-half sales. 

For the 6 months ended Dec 31, 2003, BHP Billiton posted a profit of US$1.213bil, up from US$931mil a year earlier.  

Including exceptional items involving a legal settlement and a tax restatement, the company made a net profit of US$1.339bil for the latest half-year compared with US$912mil previously.  

BHP Billiton chief executive Chip Goodyear said China contributed US$1.1bil towards the company's total 6-month revenues of US$10.9bil, almost equalling its previous full-year contribution. 

The company said the strength of the Australian dollar and South African rand curtailed earnings growth. 

The Aussie dollar rallied about 34% to 75 US cents over the 12 months ended Dec 31, 2003, while the volatile rand rose about 28% over the same period. 

“If we adjust for these currency items, the underlying profit performance was up a little over US$500mil, or 52%, from the prior period,” Goodyear said. – Reuters

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