BHP Billiton posts decent profits

Newly merged Australian-British behemoth BHP Billiton (BHP-N) unveiled a net profit of US$1.53 billion for the year ended June 30, up US$23 million from the equivalent profit the previous year.

The group’s solid performance is attributed to its diversified portfolio of commodities, which has cushioned the impact of the global economic slowdown.

BHP also emphasized that it would not spin off its lucrative petroleum business as part of a merger with Australian oil and gas company Woodside Petroleum.

The biggest blow to BHP Billiton’s bottom line came from a multimillion dollar writedown on its 52% stake in the Ok Tedi gold-copper mine in Papua New Guinea. The actual size of the writedown varies depending on whether Australian or British accounting styles are used.

The results also includes charges of US$92 million in merger costs and a US$410 million writedown in the group’s hot-briquet iron plant in Venezuela.

Before exceptional items, BHP Billiton’s net profit amounted to US$2.19 billion, a gain of 25.6% on the US$1.74 billion recorded a year earlier.

Sales revenues rose 4% to $19.08 billion while earnings per share were up 21% at US36.8 cents from US30.4 cents.

It is not surprising that the company’s strongest performer was the petroleum unit, where earnings before interest and tax, excluding exceptional items, rose by US$346 million, or 33%.

Still, BHP Billiton warned that the global slowdown will negatively affect earnings, echoing a similar gloomy outlook from rival giant Rio Tinto (RTP-N) a couple of weeks ago.

BHP Billiton also announced it was joining forces with US aluminum giant Alcoa (AA-N) to merge their respective North American metal-distribution businesses in order to reduce costs.

Under the plan, BHP Billiton will combine its Vincent Metals Goods in the U.S. and Atlas Ideal Metals in Canada, with Alcoa’s North American distributor, Reynolds Aluminum Supply, or Rasco.

BHP and Alcoa will each own half of the new company, which will have 90 metals-distribution offices across North America.