① As demand for iron ore and other core commodities remained strong, BHP Billiton's revenue for the first half of the fiscal year was basically the same year on year. However, due to the impact of the depreciation of nickel assets and other provisions, the company's net profit declined sharply; ② BHP Billiton emphasized that it is expected that the developed country market will gradually pick up, while demand in its largest market, China, is still “healthy.”
AFP, Feb. 20 (Editor Liu Rui) On Tuesday, BHP Billiton Group, the world's largest mining company, announced financial results for the first half of the fiscal year.
Financial reports show that in the six months ending December 31 of last year, the company's revenue was basically the same as the same period last year as demand for iron ore and other core commodities remained strong. However, due to the effects of depreciation of nickel assets and other provisions, the company's net profit declined sharply.
However, the company stressed that it is expected that developed markets will gradually pick up, while demand from China, its largest market, remains “healthy.”
Asset depreciation caused BHP Billiton's net profit to plummet
Financial reports show that in the first half of the 2024 fiscal year ending at the end of last year,
BHP Billiton's revenue was US$27.232 billion, up 6% year over year;
Potential attributable profit from continuing operations was $6.57 billion, slightly lower than analysts' expectations of $6.73 billion;
The company will pay an interim dividend of 72 cents per share, down from 90 cents in the previous six months.
BHP Billiton's net profit for the first half of the fiscal year fell 86% from the same period last year to US$972 million.
Last week, the company announced a $2.5 billion depreciation of the value of its Australian nickel assets due to a surge in nickel supply in Indonesia, which dragged down nickel prices. The company also said it will nearly double its reserves to cover losses caused by the collapse of the Samaco dam in Brazil in 2015 to US$6.5 billion.
Referring to its nickel assets in a statement, BHP Billiton said it “faced challenges” during this six-month period, and that the depreciation of this portion of nickel assets “offset the impact of steady operating performance in other areas and overall healthy commodity prices.”
The financial report also shows that iron ore is still the company's most important source of revenue. In the first half of the fiscal year, iron ore prices soared by 28% and remained at an all-time high, which prompted major producers such as BHP Billiton to already consider developing iron ore deposits that had once run aground.
Demand in the Chinese market is still “healthy”
BHP Billiton said in a statement that the lagging effects of global inflation (particularly on the labor side) will continue until the second half of the 2024 fiscal year. However, the company expects the global economy to be more balanced, and there is evidence that the worst wave of overall inflation has passed, which will have a positive impact on the industry this year.
BHP Billiton anticipates that all of its businesses are expected to meet annual production and cost targets, and emphasizes that the market demand in China, its largest customer, is still “healthy.”
BHP Billiton said in a statement: “After a year of difficult demand for steel and non-ferrous metals, the economic outlook for developed countries is expected to improve moderately... China and India are expected to remain relatively stable sources of commodity demand.”