BHP Billiton Repurchases $10 B

Elena
07 Feb, 2007
New York City

BHP Billiton announced surprisingly a $10 billion share buyback Wednesday after reporting a net profit increase of 41% to a record $6.2 billion for the six months period ending in December. The miner''s revenue for the first half climbed 22% to $22.1 billion, driven by strong production results for most mineral commodities on soaring prices. Company''s stock rose 3.5% in pre-market trading.

[R]8:00AM BHP Billiton announced a surprising $10 billion buyback.[/R]
BHP Billiton ((BBL)) announced surprisingly a $10 billion share buyback Wednesday after reporting a net profit increase of 41% to a record $6.2 billion for the six months period ending in December. The miner''s revenue for the first half climbed 22% to $22.1 billion, driven by strong production results for most mineral commodities on soaring prices. The half-year profit is a record for the company but falls just below market expectations of around $6.3 billion. BHP is planning to add another $10 billion to its previously announced $3 billion share repurchase plan. The equity purchases will include off-market purchases as well as open market purchases. BHP has bought back $1.7 billion of stock at an average price of $18.23 since announcing its earlier buy back plan. Including the $10 billion pledge, BHP has returned $17 billion to shareholders since August 2004.

The largest miner in the world also announced that CEO Chip Goodyear will retire by the end of 2007. BHP said there are strong internal candidates to replace Goodyear but the board will also consider external candidates. News of the buyback plan and healthy profit gain lifted BHP shares 6% on the Australian Stock Exchange. Company''s stock traded up 3.5% in pre-market trading.


[R]7:30AM Asian markets mostly rise with Japan, South Korea bucking the trend.[/R]
Asian markets advanced broadly on Wednesday. In Tokyo, the Nikkei 225 index lost 114.54 points, or 0.66%, to finish at 17,292.32. Advantest, semiconductor-equipment maker, shed 4.1%, leading the market lower. Investors feared that the company could be hurt by falling orders as chipmakers reduced investment spending due to declining DRAM and flash memory prices. Following suit, Tokyo Electron ended flat while Toshiba fell 0.8%. Retailers and banking stocks also dropped, with Isetan Co. sinking 6.4% to and Resona Holdings Inc. falling 0.9%. Canon, digital camera maker, declined 1.8% on the weaker yen, as it it makes 75% of its total sales outside Japan.

Australian S&P/ASX 200 advanced 0.5% to a record 5,899.80. BHP, the largest mining company by market value in the world, jumped 5.9%, as its first-half net income rose 41% from a year earlier. The benchmark Straits Times Index in Singapore gained 13.35 points, or 0.4%, to close at 3,236.6. In Hong Kong, the Hang Seng Index rose 24.49 points, or 0.1%, to 20,679.69. Shares were boosted by a recovery in China-related firms, particularly banks, after they declined in the last month. Bank of China surged 1.6%. In China, stocks rallied on renewed interest in banks and other index large-caps. The benchmark Shanghai Composite Index gained 1.5% to 2,716.18. The Shenzhen Composite Index jumped 1.9% to 666.96, while in South Korea shares dropped, breaking a four-day rally, on losses in banks and shipbuilders. The Korea Composite Stock Price Index fell 0.2%, to 1,426.29.


[R]6:30AM European stocks trade higher Wednesday morning on strong earnings.[/R]
European markets advanced on Wednesday. By mid morning, Frankfurt Xetra Dax gained 0.4% to 6,901.18, the CAC 40 in Paris added 0.3% to 5,693.04 and the FTSE 100 in London was 0.1% higher at 6,354.3.

Advancers

It was earnings news that boosted markets in early trading. Publicis, a French advertising agency, advanced 4.1% after it posted higher-than-expected full-year sales and said that its operating margin for the year would surpass the one in 2005. Peugeot, French carmaker, added 1.1%, after releasing a narrowing operating margin for 2006 but above expectations. Group sales had risen in Q4 following declines in the previous two quarters. BHP Billiton topped forecasts with its first-half results, as net profit rose 41% to $6.2 billion, while higher metals prices boosted the rest of the sector. Billiton surged 4.8% and Antofagasta added 1.5%. BHP Billiton announced a $10 billion share buyback on Wednesday.

The utilities sector was buoyant as expectations of consolidation firmed up Endesa of Spain announced late on Tuesday that the 41 billion euros offer from Eon of Germany was approved and the Spanish utility recommended the deal to shareholders. Endesa shares gained 0.7%, while Eon added 2.4%.

Decliners

Swiss pharmaceutical company Roche lost 2.6% after it reported weaker-than expected guidance outlook. Roche posted a 36% rise in full-year profit that was in line with forecasts, but the outlook for 2007 disappointed as the company expects lower sales of pandemic influenza treatment Tamiflu. In the auto sector, BMW shares declined 1.7% in Frankfurt, after shareholder Allianz announced that it plans to sell about 16.1 million shares in the car maker.

Oil and precious metals

Oil advanced as the market is awaiting the US weekly stocks report that is expected to show a drop in distillate stocks following a recent cold snap in the Northeast of the country. In early trade in London front-month Brent crude contracts for March delivery added 67 cents at $59.08 a barrel, while front-month New York light sweet crude contracts for March delivery advanced 60 cents to $59.49 a barrel. Gold gained in London for a third consecutive day on talks that higher costs will give rise to demand for precious metals as a hedge against inflation. Gold for immediate delivery advanced $2.35, or 0.4%, to $655.65 an ounce in early trading in London. Silver climbed 6.37 cents, or 0.5%, to $13.685 an ounce today, palladium gained $1.50 to $342.50 an ounce and platinum moved $5.50 higher to $1,188.50 an ounce.

Currencies

The euro gained some ground against the U.S. dollar on Wednesday and the yen retreated from earlier gains as speculations circulate that the Japanese currency would be a significant topic at the upcoming meeting of G7 financial ministers. The 13-nation euro bought $1.2989 in morning European trading, marginally up from $1.2978 in New York late Tuesday. The British pound declined slightly to $1.9703 from $1.9704 on the likelihood that the Bank of England would surely keep its interest rate unchanged at 5.25% when it also meets on Thursday. The dollar was up to 120.66 Japanese yen from 120.08 yen on Tuesday.