BHP Billiton lifts annual profit to $US13.83 billion, confirms spin-off

BHP has posted a strong lift in annual profit, as it confirmed a spin-off of its nickel and manganese assets.

BHP Billiton has posted a strong lift in annual profit, at it announced the spin-off of its nickel and manganese assets to focus on iron ore, petroleum, copper and coal.

In the 12 months to June 30, BHP posted a profit attributable to members of $US13.83 billion, a 23.2 per cent increase on a year earlier.

BHP, which flagged the spin-off on Friday, will use the new company, dubbed NewCo, to house its non-core aluminium and manganese businesses and the Cerro Matoso Nickel, Energy Coal South Africa, Illawarra Metallurgical Coal and Cannington Silver-Lead-Zinc mines.

The group will be listed on the Australian Securities Exchange with a secondary listing in South Africa.

It will be headed by David Crawford as chairman, Graham Kerr as chief executive, and Brendan Harris as chief financial officer. Its board composition will reflect the South African dual listing.

The demerger will be completed in the first half of next year.

The spin-off leaves BHP Billiton almost exclusively focused on its exceptionally large, long-life iron ore, copper, coal, petroleum and potash basins.

Revenue for the year edged up 1.9 per cent to $US67.21bn.

The mining giant will pay a final dividend of US62c, fully franked, up from US59c in the previous corresponding period.

Net debt fell to $US25.8bn in the year, while capital and exploration expenditure declined by 32 per cent to $US15.2bn.

The profit growth was broadly in line with analysts’ expectations.

It came after the world’s biggest mining company achieved a 15th straight year of record iron ore production.

Chief executive Andrew Mackenzie said BHP had delivered on its commitments in the past 12 months.

“Our operational performance continued to improve, enabling us to exceed production guidance for a number of our core commodities including iron ore, metallurgical coal and petroleum liquids,” he said.

The miner expects capital and exploration expenditure of “no more than” $US14bn in the coming year, or $US14.8 billion if its demerger is not implemented.

The company said the demerger would allow it to almost exclusively focus on iron ore, copper, coal, petroleum and potash.

“With fewer assets and a greater upstream focus, the group will be able to reduce costs and improve the productivity of its largest businesses more quickly,” BHP said.

As a result, BHP expects to generate stronger growth in free cash flow and a superior return on investment.

Chairman Jac Nasser said the proposed demerger would provide investors with choice and unlock value in both companies.

The 24,000 employees at the new company’s assets could expect minimal changes to operations, BHP said.

Its headquarters will be in Perth, while a regional office will be located in Johannesburg.

The new company is expected to be listed on the Australian sharemarket by mid-2015.

With AAP