Billiton tops targets with £1.26bn

LONDON and Sydney-listed mining giant BHP Billiton has posted slightly better-than-expected net profits, crediting its spread of business. But the group warned that stock market turmoil and falling confidence were darkening global economic prospects.

Income fell nearly 12% to US$1.93bn (£1.26bn) before one-off items for the year to 30 June, but analysts had forecast profits below $1.9bn. However, higher-than-expected extraordinary items clipped net pre-tax profits to $1.69bn, up 10.5% on last year.

Chief executive Brian Gilbertson said the results provided 'striking support' for the company's business model of holding a 'diversified portfolio of high-quality assets'. He hailed several highlights, including the demerger of BHP Steel, the approval of 12 new projects with capital investment totalling $2.9bn, and the delivery of $220m in benefits from the merger of BHP and Billiton. Today's results were the first full-year figures since the merger. Exceptional items totalled $212m before tax, including $80m for merger and restructuring costs.

Gilbertson said the outlook was clouded by uncertainties surrounding the global economy as 'extreme volatility in equity markets, falling business and consumer confidence and heightened risk aversion cast a pall over the global economic outlook'.

The profit was struck on revenues of $17.77bn, down 6.8% due to lower commodity prices and lower sales volumes from key assets such as the Escondida copper mine in Chile, and from the Australian Bass Strait oilfields. Changes in UK tax for oil and gas companies, which increased from 30% to 40% in June, cost Billiton $56m.

Sydney-based UBS Warburg analyst Glyn Lawcock described the $1.93bn figure as 'quite strong' but said he was surprised by the exceptional items.