Julie Bain
20 February 2004
Johannesburg — BHP Billiton's profit for the six months to the end of December was dented by the strong rand and Australian dollar.
However, the world's biggest diversified resources company is large enough and has a product portfolio wide enough to brush off the current currency effect as the Chinese market continued to demand increased sales.
In the half-year to the end of December the company, which has about 20% of its assets in southern Africa, said the stronger currencies cost it $455m.
Nonetheless, BHP Billiton posted a 47% rise in attributable profit to R1,34bn compared with the year-ago period, as commodity prices gained and demand from China seemed insatiable.
Attributable profit excluding exceptional items rose 30,3%, to 1,21bn. Higher metals prices boosted net earnings before interest and tax by $920m.
CEO Chip Goodyear said yesterday that sales to China made up 10% of the company's total sales in the period under review, compared with 5% a year ago.
He said the company was working long hours to meet demand from China. As this grew,a contagion effect was being felt in the whole of eastern Asia.
In the six months the company's Western Australian iron ore business, its aluminium operations as well as nickel, alumina and diamond projects hit record production levels.
BHP Billiton has seven of what it calls customer sector groups: petroleum, aluminium, base metals, carbon steel materials, diamonds and speciality products, and stainless steel materials.
The spread has in the past few years positioned the company well, according to analysts.
When base metal prices were in the doldrums, its petroleum division, the biggest contributor to the BHP Billiton's earnings before interest and tax , was performing well as a result of the strong oil price at that time.
Petroleum's contribution in the six months fell 9% on the year, but base metals' contribution to earnings before interest and tax rose 301%.
BHP Billiton is SA's largest exporter of energy coal and the contribution of that division to earnings before interest and tax fell 32% in the period.
Goodyear said the company had been positioning itself for further growth by bringing on 15 new projects in the past three years. It plans to spend $8,1bn on 23 more potential projects until 2008. These projects, including alumina, base metals, petroleum and diamonds, would enable it to meet the challenge of growing Chinese demand.
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