BHP shares ease after record result


BHP merged with Billiton in July 2001

MELBOURNE, Australia -- BHP Billiton shares eased Friday from their record level a day earlier, after the Australian resources giant reported a $1.198 billion half-year profit that was in line with expectations.

BHP Billiton shares were down 25 cents or 2.02 percent to A$12.14 by mid-morning, after hitting a record intra-day high of A$12.49 on Thursday, ahead of its results release.

Its record profit for the six months to December 2001 was a gain of 3.5 percent on its year-earlier result, with BHP Billiton chief executive Paul Anderson calling it a "solid result" that reflected the group's resilience and earnings capability.

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Paul Anderson, CEO BHP Billiton
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But Anderson warned of difficult times ahead, noting there was little evidence yet of a recovery in the world's major economies.

"Though demand and prices remain strong for some of our products and in certain markets, others are experiencing challenging conditions," he said in a statement late Thursday.

Difficult outlook

"While we are confident of the medium term outlook, the current half year will be difficult," he said.

Anderson said some lower commodity prices reduced BHP's turnover for the half year by about $405 million, delivering a $280 million hit to its operating profit (earnings before interest and tax).

But he said this was partly offset by stronger prices for coal, gas and iron ore.

Anderson told CNN television Friday that BHP's record performance showed the ability of a diversified portfolio to weather a downturn better than single-resource companies.

He repeated his view that the next six months would be difficult, but said he was "fairly optimistic" about conditions a year from now.

Merger in July 2001

BHP completed a $28 billion merger with London-based mining group Billiton in July last year.

The company said the merged entity was on track with its integration plans, including cutting the number of offices globally from 32 to 14 by the end of the June 2002 financial year.

Ratings agency Standard & Poors said Friday it expected BHP Billiton's credit protection measures to improve in the next two years as the benefits of integration emerged.

But it warned that if there were problems with integration, delays with asset sales or negative market factors, its rating outlook "could revert to stable".