BHP tallies lower profits

Vancouver Despite strength in oil and nickel operations, weakness in copper and coal sales resulted in a 9% drop in profits for diversified miner BHP Billiton (BHP-N).

The major posted profits of US$553 million during the quarter ended Sept. 30. Revenues came in at US$3.92 billion, up 2.9% over the same time last year, while basic earnings per share was 2.1% lower at US$0.09 per share.

“We believe that this is a very solid result, delivered in an environment of continued economic uncertainty,” says Chief Financial Officer, Chris Lynch.

The group’s diverse resource portfolio continues to generate strong cashflow, returning US$844 million in earnings before interest and tax for the quarter, although this was 2.7% lower then last year.

Petroleum operations continued to boost the profit line with the unit delivering US$384 million. The company realized oil prices of US$26.97 per barrel for the quarter.

A 20% jump in nickel prices combined with increased production helped the stainless steel division reverse a US$11 million loss in the previous quarter to deliver earnings of US$23 million.

Higher costs and unfavorable exchange rate impacts cut 8.6% from coking coal earnings, with the division er returning US$267 million, compared to US$292 million last year. Energy coal faired no better with earnings falling 54.4% to US$68 million.

Earnings from copper slumped 70% to US$16 million with production scaled back as prices remain near 1987 lows.

The company also took a US$19 million loss on the sale of its 6% interest in BHP Steel after the demerger of the steel unit in July. BHP Billiton spun out its steel operation as a separate independent company. A year ago the steel operation contributed US$60 million in earnings before interest and tax for the first quarter.

“On balance, with expansionary fiscal policy and near record low interest rates in place, the world economy should avoid a return to recession,” says the group’s Chairman, Don Argus. “However, growth in the near term will be below average and the risks remain on the downside.”