BHP Billiton, the world's biggest miner, on Wednesday posted a 19% jump in second-half earnings on surging sales of copper, iron ore and coal, and pegged future growth to strong Asian demand.
BHP, which has earmarked more than $20 billion for new projects, said near-term commodity prices were expected to remain high, if more volatile, and forecast big volume growth in petroleum, base metals, iron ore and stainless steel.
It said its customers did not expect a global credit squeeze to have a big impact on demand for raw materials, particularly in China and India.
"We are going into a growth phase at BHP Billiton in terms of petroleum, copper, nickel and this is just reminding everyone that it's coming," said David George, a resources analyst at JP Morgan. "We'd have to rate it as a pretty strong result."
BHP's London-listed shares, which have outperformed their U.K. mining rivals by almost 22 percent so far this year, were up 3.8%, valuing the group at around 30.9 billion pounds ($61.27 billion).
January-June net profit before one-offs rose to $7.25 billion, according to Reuters calculations, from $6.09 billion a year ago. The pace of growth slowed from a 41% jump in first-half earnings.
Consensus tallies had pointed to a six-month net profit close to $7.4 billion, according to a Reuters poll of analysts.
Full-year net profit before one-offs was a record $13.68 billion, up from $10.15 billion, while reported net profit was $13.42 billion.
"The group's economic outlook and significantly raised dividend offer confidence though the shares will clearly remain at the mercy of wider market turbulence," Numis analyst Simon Toyne said in a note.
Production Records
BHP said the result was driven by record annual production for eight major commodities, while prices were at three-decade highs.
"In 2007, real prices for all our major commodities remained at or near their highest levels since the 1970s as Chinese demand for raw materials continued," the company said.
Costs, excluding non-cash costs, rose 3.6% on a year ago, with increases for labour, contractors, raw materials, fuel, energy and other inputs.
Rising costs cut rival Rio Tinto's first-half earnings by $503 million earlier this month, wiping out most of Rio's gains from higher prices and strong demand.
Analysts said BHP appeared to be managing cost pressures well.
"The net non-cash cost increase of only 3% is encouraging and it confirms the declining trend of cost increases which BHP has highlighted in previous briefings," said Rob Craigie, senior analyst at broker FW Holst.
Marius Kloppers, who takes over from Chip Goodyear as CEO in October, told reporters BHP would continue to invest in copper, iron ore, coking coal and petroleum among other products.
The company had 33 projects in either execution or feasibility, and had further medium-term options with capital expenditure requirements of more than $50 billion.
BHP would also look at acquisitions, but Kloppers declined to comment on whether the miner had held talks with aluminium giant Alcoa Inc in the wake of Rio's takeover of Alcan.
"Provided we can get those opportunities that are upstream, low-cost, long-life and will be so in the future, we are going to take a very good look and we will be as aggressive as we have been in the past," Kloppers said.
BHP's peers, including CVRD, Xstrata and Anglo American have also had hefty profit gains.
Copper prices on the London Metals Exchange are trading around $7,000 a tonne, having retreated from multi-year highs above $8,000 on global credit market worries.
BHP is about half way through a $13 billion capital management programme and would return the rest to shareholders over the next 12 months.
It declared a final dividend of 27 U.S. cents, up 46% on the previous year and well above market expectations of around 23 cents.
BHP's Australian-listed shares have risen about 40% this year, outpacing a 5.7% increase in the benchmark S&P/ASX 200 index in the same period.