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BHP Billiton Profit Up 41%, Goodyear to Retire

CNBC.com
Wednesday, 7 Feb 2007 | 10:45 AM ET

The World’s No. 1 miner, BHP Billiton, announced Wednesday a 41% rise in first-half profit, a $10 billion share buyback plan and that Chief Executive Chip Goodyear is to step down by the end of 2007.

“I plan to retire at the end of the year but we’ve got plenty to do in the year ahead,” Goodyear said on "Squawk Box Europe."

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There could be market uncertainty about who the next CEO of BHP Billiton will be following Chip Goodyearâ??s surprise resignation. CNBC's Ross Westgate speaks to Andrew Keen, Research Analyst, Global Metals & Mining at Sanford Bernstein.

Despite Goodyear's surprise departure, markets welcomed the huge increase in the company's capital management program and shares rose slightly at the open.

"The capital management is pretty big, and I believe there would be a positive reception to this proposed scheme," Adam Dixon, a portfolio manager with Ausbil Dexia, told Reuters.

"I am a little bit surprised with the impending resignation of Goodyear, but the management team is obviously quite deep," Dixon said.

BHP said the profit rise reflected strong markets for most mineral commodities sales over the period, despite deterioration in some metals prices.

Net profit for July-December rose to $6.17 billion from $4.36 billion a year earlier, slightly below market forecasts for about $6.3 billion, according to four analysts polled by Reuters.

Higher prices for nickel, copper, aluminium, iron ore, petroleum products, zinc, alumina, energy coal, silver lead, manganese alloy and diamonds contributed about $4.2 billion to earnings before interest and tax (EBIT), the company said.

Despite returning a substantial wedge of the company’s capital going to shareholders, Goodyear didn’t rule out future acquisitions when speaking to “Squawk Box Europe.”

“We’ve done a number of good acquisitions over the years and if a good opportunity comes along this organisation has no qualms about taking it,” he said.

Share Buyback

"The next stage in the capital management programme will be the implementation of an off-market buy back with a targeted maximum of A$3.25 billion ($2.5 billon) of BHP Biliton shares," the company said.

At the same time it would continue to repurchase shares on market in BHP Billiton as opportunities arose.

The interim result showed hefty earnings contributions from the base metals and carbon steel materials divisions.

A similar scenario was played out last week when close rival and fellow London and Sydney-listed Rio Tinto posted a 25% gain in half-year profit to $3.59 billion.

The company said market indicators did not suggest a large scale build-up in commodity inventories in 2007, although demand was still likely to vary regionally.

"China is set to continue as the main driver of demand, but more mature markets may also lend support, especially Europe and Japan," it said.

BHP shares have lost about 8% since July as metals prices recoiled from record highs, compared with a 16% rise in the broader S&P/ASX 200 index.

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