BHP Names New CEO as Profit Slumps
Global miner BHP Billiton appointed the head of its non-ferrous business as its new chief executive on Wednesday to replace Marius Kloppers, as it reported an expected 43 percent drop in half-year profit.
Andrew Mackenzie, 56, who joined BHP from rival Rio Tinto in 2008, will move into the top job in May, taking the reins at a time when the company is battling to protect margins by cutting costs amid weaker commodity prices.
The announcement came as BHP reported its profit before one-off items tumbled to $5.68 billion for July-December 2012 from $10 billion a year earlier and took $3 billion in writedowns on its aluminium and nickel businesses.
Analysts said the change of CEO was not comparable with rival Rio Tinto Ltd, which sacked former CEO Tom Albanese last week for misjudged deals in aluminium and coal.
"It's a tenure thing," said Hayden Bairstow, a CLSA mining analyst. "Tom Albanese was taken out for performance, but this is different."
Mackenzie, a prize-winning scientist who grew up in an industrial town near Glasgow, was at oil and gas giant BP before he entered the mining industry, giving him crucial experience in the key commodities BHP has targeted for growth as it looks to make itself less dependent on iron ore.
"The board has decided that Andrew is the right person to lead BHP Billiton in a changing global environment," the company said in a statement.
Mark Taylor, senior resources analyst at Morningstar, said the market would welcome Mackenzie's expertise in energy.
"The new CEO is coming from a very long career in oil and gas and minerals, especially oil and gas. And oil and gas is a growing proportion of BHP's business. So I think it will be well received by the market," he said.
The timing of Kloppers' exit was a bit sooner than expected, even though the company flagged last November that it was looking for a new CEO. Kloppers has been in the job for nearly six years.
He joins the fallen chiefs at BHP's rivals Rio Tinto, Anglo American and Xstrata, which have all chopped heads after they splashed out on expensive projects and acquisitions and allowed costs to get out of control in the boom years.
Kloppers won kudos for leading BHP through the global financial crisis in much better shape than its peers, but disappointed investors with his expensive bid for shale gas assets in the United States, which led to $2.8 billion in writedowns and cost him his bonus last year.
He also led the company in three failed takeover tilts at Rio Tinto, Rio Tinto's iron ore business and Potash Corp , three deals that fell apart largely as the company had underestimated the concerns of regulators.
BHP said it expects global commodity prices to remain under pressure as new low-cost supplies come into production, even through demand is expected to improve over the next 12 months.
Net profit fell to $4.2 billion with the aluminium and nickel writedowns offset by gains from the sales of its Richards Bay minerals stake, its Browse gas stake, its diamonds business, and Yeelirie uranium deposit.
BHP raised its interim dividend by 3.6 percent to 57 cents, also in line with analysts' forecasts.
Rio last week surprised investors with a 15 percent rise in its dividend despite reporting its first ever loss, hit by $14.4 billion in writedowns on its aluminium business and Mozambican coal assets, which cost Chief Executive Tom Albanese his job.
BHP last year shelved $40 billion in projects and shut some loss-making coal mines, with the whole industry battling with soaring costs, a strong Aussie dollar and sliding commodity prices.
In further moves to protect its margins, it said on Wednesday it had cut $944 million in costs over the past half year, but it did not outline a broader target for cost cuts.
That is in contrast with rival Rio Tinto, which plans to cut $5 billion in costs by the end of 2014.