BHP Net Drops 35% on Global Slowdown

Marcus Jacob
22 Aug, 2012
New York City

Australian stocks closed lower after the mining giant reported earnings that met expectations. BHP earnings in the fiscal year ending in June declined 35% on nearly flat revenues as the fall in base metal prices and iron ore trimmed record profits from a year ago. Woodside Petroleum net declined.

[R]8:30 PM Sydney – Australian stocks closed lower after the mining giant reported earnings that met expectations. BHP earnings in the fiscal year ending in June declined 35% on nearly flat revenues as the fall in base metal prices and iron ore trimmed record profits from a year ago. Woodside Petroleum reported lower net.[/R]

Australian markets closed lower led by a decline in resources stocks but retail stocks were higher.

BHP Billiton reported a sharp slowdown in earnings and cash flows as the diversified miner battled a plunge in base metal prices and weak demand for iron ore and coal.

The ASX 200 index slid 7.40 to 4,376 and the broader All Ordinaries edged down 7.51 to 4,403.26.

The Australian dollar decreased to US$1.0436 and gained a fraction against the euro and the yen.

BHP Faces Global Slowdown

BHP said revenues in the fiscal year to June increased 0.7% to $72.23 billion and profit attributable to shareholders declined 34.8% to $15.42 billion. Net operating cash flow was $24.4 billion and total debt ratio on the balance sheet was 26% of total capital.

Earnings per share declined 33% to $2.89 from $4.29.

BHP reports financial statements that meeting international standards and in the U.S. dollars.

The company declared dividend in the second half of 57 cents in addition to 55 cents dividend in the first half and for the full year the dividend increased 11%.

Segment wise, profits varied dramatically as a slowdown in the demand in base metals and iron ore prices turned the operations negative.

Petroleum segment reported profit of $1.5 billion, metallurgical coal net was 339 million and energy coal net was $95 million.

Earnings in various commodities units were impacted differently after the weakness across commodities complex.

Aluminum segment earnings were lower by $245 million, manganese unit earnings fell by $400 million and iron ore division net dropped by $1.34 billion and base metals unit that includes copper was affected negatively by $1.6 billion.

The company is planning to slowdown several development projects and is looking for cheaper and less capital intensive ways to explore Olympic Dam project.

Stock Movers

Resource stocks traded lower after BHP reported lower earnings that met expectations.

BHP Billiton Limited slipped 11 cents to $33.16 and, Rio Tinto Limited dropped 31 cents to $54.10 and Fortescue Metals Group gained 10 cents to $4.15.

Iluka Resources plunged 53 cents or 5.2% $9.77 and Lynas Corporation Limited fell 2 cents to 66.5 cents.

Newcrest Mining climbed 43 cents to $25.83 and Kingsgate gained 13 cents to $4.56. Whitehaven Coal increased 12 cents to $3.54.

Monadelphous Group tumbled $1.74 or 7.5% to $21.52 following a weakness in the resource sector stocks.

Oil Search Limited increased 8 cents to $7.24 and Santos Limited closed unchanged at $12.06 and Woodside Petroleum plummeted $1.10 to $34.90. Sundance Energy grew 3.5 cents to 58 cents.

Woodside dropped 3% after energy explorer reported first-half net declined on higher than expected cost of Pluto liquefied natural gas project in Western Australia.

Seven West Media increased 0.5 cents to $1.49 after net soared 97% to $229.1 million.

Ten Network decreased 2 cents to 42 cents and Fairfax Media slid 1 cent to 56.5 cents.

Consolidated Media Holdings closed unchanged at $3.44 after it reported 15.6% decline in net profit.

Metcash gained 7 cents to $3.62, Harvey Norman Holdings increased 7 cents at $2.11 and Woolworths lowered 3 cents to $29.45. Kathmandu closed unchanged at $1.35.

Commonwealth Bank of Australia plummeted 46 cents to $55.34 after it traded ex-dividend of $1.97.

Bank of Queensland slipped 5 cents to $7.65. ANZ added 1 cent to $24.96. National Australia Bank decreased 11 cents at $25.26 and Westpac Banking Corporation added 2 cents to $24.89.

Macquarie Group slipped 8 cents to $26.73 and Perpetual Limited dropped 65 cents to $27.

Noni B Limited surged 10% to 82 cents after women’s fashion retailer reported sharp jump in annual net.

David Jones Limited up 2 cents to $2.58 and Wesfarmers climbed 28 cents to $34.18. Billabong International Limited closed unchanged at $1.37. Breville Group gained 9 cents to $5.25. Harvey Norman increased 7 cents to $2.11.

Reject Shop soared 8% to $10.59 after the deep discount retailer reported full-year net soared 35.6% to $21.92 million.

Toll Holdings slipped 7 cents to $4.47 and Leighton slumped 20 cents to $17.35 and property developer Mirvac Group gained 4 cents to $1.40.

Qantas down 1 cent to $1.17 and Flight Centre dropped 25 cents to $23.70 and Virgin Australia added 0.5 cents to 46 cents.

QR National increased 6 cents to $3.47.

Telstra slid 3 cents at $3.72 and the telecom operator said it plans to cut 422 full-time staff and 229 positions filled with the help of employment agencies.