BHP Second-Half Profit Drops After Prices Slump, Slowing GrowthElisabeth Behrmann
BHP Billiton Ltd., the world’s biggest mining company, had a 6.9 percent drop in second-half profit after growth in emerging economies slowed and metal prices fell.
Profit, excluding one-time items, was $6.7 billion in the six months to June 30, from $7.2 billion a year ago, according to Bloomberg calculations. That missed a median forecast of $6.8 billion of seven analysts surveyed by Bloomberg.The Melbourne-based company also said it will invest $2.6 billion in the Jansen potash project in Canada.
BHP joins Rio Tinto Group and Vale SA in reporting a decline in profit as slowing economic growth in China saps demand for raw materials, dragging down prices. BHP Chief Executive Officer Andrew Mackenzie cut capital spending this fiscal year as investors including BlackRock Inc. pressure mining companies to defer expansions and acquisitions.
“The equity market is looking for the miners to cut spending and increase returns,” Glyn Lawcock, a Sydney-based analyst for UBS AG, said in a report before the results. “It’s been a tough year for BHP.”
BHP fell 1.4 percent to A$36.54 at the close of trading in Sydney before the results were released.
“Economic conditions over the second half of the 2013 financial year were affected by lower than expected growth in emerging economies,” the Melbourne-based company said today in a statement. “We expect more balanced global growth over the long term as China continues to develop its economy and large developed economies, such as the U.S., grow despite fiscal challenges.”
Net income dropped to $10.9 billion in the year to June 30 from $15.4 billion a year ago, the company said in a statement. Profit, excluding one-time items, was $11.8 billion, compared with $17.2 billion a year ago. That missed a median forecast of $12.7 billion of seven analysts surveyed by Bloomberg.