Global mining giant BHP Billiton yesterday said its full-year net profit almost doubled to a mammoth US$23.6 billion, citing robust demand from China and India for what is Australia’s biggest-ever result.
BHP said the performance, which included unprecedented revenues of US$71.7 billion and record output in four key commodities, including iron ore, reflected strong growth in developing economies.
“Robust demand, industry-wide cost pressures and persistent supply-side constraints continued to support the fundamentals for the majority of BHP Billiton’s core commodities,” the Anglo-Australian miner said.
“Another strong year of growth in Chinese crude steel production ensured steelmaking material prices were the major contributing factor to the US$17.2 billion price-related increase in underlying earnings,” it said.
The result in the year to June 30 was up 86 percent from the previous 12 months.
BHP, the world’s biggest miner, said commodities had remained “an asset of choice” this year and it expected robust demand in the short and medium term, despite some monetary policy tightening in India and China dampening growth.
“The fundamentals for iron ore and metallurgical coal remain compelling as the supply response is expected to remain constrained and capital costs are expected to rise,” it said.
“Over the longer term, we expect strong demand for our core commodities to be underpinned by the industrialization and urbanization of China, India and other emerging economies,” it said.
“We expect robust demand in the short and medium term, supported by commodities-intensive emerging economic growth,” it added.
However, the resources giant warned of global skills shortages and said supply-side tightness was expected to begin easing in “several commodities”, also sounding a warning on worldwide instability.
“Global imbalances and high levels of sovereign debt continue to create uncertainty and a protracted recovery remains our base case assumption for the developed world,” BHP said.
“However, a coordinated policy response has the potential to engender confidence and ease the volatility that has been the dominant theme of recent years,” the company said.