BHP Posts Record H2 Profit on High Prices, Demand

BHP Billiton Ltd., the biggest mining company in the world, reported its eighth consecutive record profit on Wednesday. H1 2007 net income came in at $7.2 billion from $6.1 billion a year ago, while full-year net income was up 28.4% to $13.42 billion. Analysts were expecting $7.5 billion for H1 and $13.7 billion for the full year. Underlying net profit was up 35% to $13.68 billion, ahead of Street expectations of $13.49 billion. Full-year revenue was up 21% to $47.47 billion. Full-year pretax earnings for the stainless steel materials unit more than quadrupled to $3.7 billion, while earnings for base metals were up 28% to $6.9 billion. The average price of nickel, used in stainless steel, more than doubled in the period, and the price of copper was up an average 12%. Demand for commodities is being driven by China, which buys 1/5 of BHP's products, according to BHP CEO Charles Goodyear. He does not expect the tightening credit markets to have a "material impact" on global demand. Although the credit crunch has dragged down commodities along with the broader equity markets -- the UBS Bloomberg CMCI index tracking 26 commodities fell 6.2% in August -- BHP maintains that "[o]ur customers in China and India believe domestic supply and demand criteria are much more important factors in their markets."

Sources: Bloomberg, MarketWatch, Forbes, Wall Street Journal I, II
Commentary: Best, Worst ADRs Year To Date • Billiton Considering Bid for Alcoa -- Report
Stocks/ETFs to watch: BHP. Competitors: AA, RTP. ETFs: ADRA

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