BHP Billiton posts record $15.4 billion profit for 2007-08

18 August 2008

The world's largest mining company BHP Billiton posted a 14.7 per cent growth to $15.39 billion as against its previous year profit of $13.42 billion as a result of higher prices and production volumes.

The company portrayed an upbeat outlook, and used the occasion to put forth its view that a possible takeover of its target, mining major Rio Tinto Ltd, now made a lot more sense than previously, given the increasing cost pressures in the industry.

The world's second-largest iron ore exporter Rio Tinto Group had earlier in June finalised iron ore contracts with Asian steel makers at a 97-per cent premium. (See: Rio hikes iron ore contract prices for Asian steel mills by 97 per cent)

BHP Billiton had launched a $147.4 billion bid for London-based Rio earlier in the year, which was duly rejected by the target company's board, with Rio Tinto maintaining that BHP's previous informal $130-billion bid undervalued the company, and that the improved bid also failed to recognise the underlying value of its mining assets.

Offering an optimistic view, BHP said it foresees short-term global economic growth to slow, though it would remain strong given continued domestic infrastructure investment and regional trade. It did caution that rising inflation would most likely have some negative impact on emerging market economies, hinting at the likes of the BRIC countries.

BHP said that China's continuing massive industrialisation translates into robust support for the global economy, and the consequent demand for raw materials remains strong, though in the short-term it expect prices to remain high relative to historical levels, ''albeit with higher volatility.