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China boom drives BHP sales

By CNN's Geoff Hiscock, Asia Business Editor

Goodyear took over as CEO of BHP Billiton after the shock resignation of Gilbertson in January.
Goodyear took over as CEO of BHP Billiton after the shock resignation of Gilbertson in January.

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SYDNEY, Australia (CNN) -- A commodity boom driven by China's demand for raw materials has pushed global miner BHP Billiton's full year sales 15 percent higher to $17.5 billion.

But the adverse impact of stronger currencies in Australia, South and Africa and Canada kept net profit to $1.92 billion for the year to June 30, a gain of 2.9 percent, the company said Thursday.

BHP Billiton, which is dual-listed in Australia and the UK, said the impact of unfavorable exchange rates was about $560 million. Without this, attributable profit would have been up 36 percent on the previous year.

It said the result was on the back of cost-cutting and generally higher sales prices and volumes.

It noted that record iron ore production in Western Australia of 76.5 million tonnes and shipments of 80.3 million tonnes reflected strong demand in all Asian markets, particularly China.

But BHP Billiton said global economic conditions remained weak during 2002-03, calling growth "anaemic" for the third straight year. It cited Asia -- and particularly China -- as the exception to this scenario.

"China appears set for another year of strong growth," it said.

Last month rival miner Rio Tinto said strong demand from key markets -- primarily China -- had pushed its June quarter iron ore production 19 percent above the same period in 2002.

In July, China's National Bureau of Statistics reported first half economic growth of 8.2 percent and said despite the second quarter slowdown caused by the outbreak of the SARS virus, the full year figure would top 8 percent.

At the same time, money is continuing to pour into China, with overseas direct investment in the first half of the year topping $30 billion, up 34 percent year on year.

BHP Billiton said Thursday that the outlook for other key commodity markets remains fragile, although it saw some "promising signs" of an upturn.

"The diversity of our portfolio, and in particular the exposure we have to the stronger Asian economies, places us well to benefit from any global economic upturn," the company said.

BHP Billiton, the world's biggest diversified resources company, was formed from the $28 billion merger of Australia's BHP and South Africa's Billiton in July 2001.

Billiton's then executive chairman, Brian Gilbertson, became CEO of BHP Billiton in July 2002, succeeding Paul Anderson. But Gilbertson shocked the market when he quit suddenly on January 6 this year, citing irreconcilable differences with the board.

He was replaced by Chip Goodyear, formerly the company's chief development officer. BHP Billiton later agreed to pay Gilbertson a termination payment of about $6.5 million. (Full story)

BHP Billiton said Thursday that total benefits and savings since the merger were now $595 million, against a target of $770 million by June 2005.

While the company has been known for its minerals, petroleum continues to grow in importance. It contributed pre-tax earnings of $1.178 billion, an increase of almost 10 percent from the previous year's $1.073 billion and the largest single contributor to earnings. It was followed by carbon steel materials (primarily iron ore) with $1.045 billion.

Shares in BHP closed 2.35 percent higher at A$10.88 on Thursday. The broader Australian market rose 0.54 percent.


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