BHP Billiton Ltd. (BHP, BHP.AX, BBL, BLT.L) reported Wednesday a sharp decline in fiscal 2012 profit reflecting hefty charges as well as weakness in commodity prices and cost pressure. Revenues increased slightly on petroleum and Iron Ore strength, even as concerns surrounding the stability of the Eurozone and the managed slowdown of growth in China led to significant market volatility. However, the Anglo- Australian mining giant announced higher dividend for the year.
Citing mounting cost pressure, BHP said it is assessing the viability of other high-cost operations and additional measures are being implemented that will substantially reduce operating costs and non-essential expenditure across the business.
In a separate statement, BHP said it will investigate an alternative, less capital-intensive design of the Olympic Dam open-pit expansion In Australia, and will not be ready to approve an expansion before the Indenture agreement deadline of December 15. BHP CEO, Marius Kloppers, said current market conditions, including subdued commodity prices and higher capital costs, had led to the decision.
For the full year, profit attributable to members of BHP plunged 34.8 percent to $15.42 billion. The latest results included net exceptional charges of $1.7 billion, mainly comprising impairment charges and a charge related to the suspension or early closure of operations of specific projects, including Olympic Dam Project.
Adjusted attributable profit, which excluded items, was $17.12 billion for the year.
Underlying EBIT margin remained at a robust 39 percent, which reflected the value of the company's diversified strategy, it said.
According to the company, lower average realised prices for many of BHP Billiton's products hurt the results significantly as global economic growth slowed and concerns surrounding the economic outlook increased.
Net tangible assets per fully paid share were $11.59 as of June 30, compared with $10.52 a year ago.
Revenues edged up 0.7 percent to $72.23 billion. Petroleum revenues climbed 20.5 percent with increased production and prices. Iron Ore revenues grew 10.7 percent and energy coal revenues went up 9.4 percent. Meanwhile, all other segments recorded lower revenues.
BHP announced a final dividend of 57 US cents per share, higher than last year's 55 US cents per share. For the full year, dividend would be 112 US cents, up 11 percent from last year.
Looking ahead, the company noted that the global macroeconomic environment would stabilise before improving in the first half of the 2013 financial year. This recovery will provide support for commodity demand and pricing in the short to medium term.
"In the short term, we expect volatility in commodity markets to persist as temporary weakness in the manufacturing and construction sectors across all key markets is expected to weigh on market sentiment. However, in the medium term we expect supportive economic policy and a broad growth bias, particularly in China, to lead to measured improvement in the external environment beginning in the first half of the 2013 financial year," the company said in its statement.
In Australia, BHP shares lost A$0.11 or 0.33 percent to close at A$33.16.
In London, BHP shares are currently trading at 1,941.50 pence, down 38.50 pence or 1.94 percent.
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