THE only admission of error in 2 hours of BHP Billiton's results presentation on Wednesday came when chief financial officer Graham Kerr conceded: "In hindsight, we would've liked to identify the change in the alumina market earlier on."
BHP's aluminium and nickel division recorded a widening loss of $US285 million in underlying earnings before interest and tax in the half - down from a $US66 million loss a year earlier - the worst performance of any division.
Further, impairments of $US1.5 billion after tax against the Worsley alumina refinery, and $US865 million against BHP's Nickel West assets, both in Western Australia, contributed substantially to the 58 per cent fall in attributable profit for the first half of 2012-13, to $US4.2 billion.
BHP declared a US57¢-a-share dividend (up 4 per cent from US55¢ a year ago) and its shares fell 0.9 per cent, or 35¢, in local trade to $38.65.
Mr Kerr, briefing investors from London, was followed by outgoing chief executive Marius Kloppers who said BHP would not be pressured into selling off assets fast, saying "assets sold in haste . . . you repent at your leisure".
In the December half, BHP completed assets sales (or announced sales that it will complete this half) totalling $US4.3 billion, including the $US1.9 billion sale to Rio Tinto of its 37 per cent stake in Richards Bay Minerals in South Africa, the $US1.6 billion sale to Shell of its 10 per cent interest in the Woodside-led Browse gas project in WA, and the $US420 million sale to Cameco of the Yeelirrie uranium deposit, also in the state. The prices achieved in these transactions were at a substantial premium, Mr Kloppers said.
The impact of lower commodity prices saw BHP's revenues fall 14 per cent to $US32 billion during the half, down from $US37.5 billion a year earlier, while underlying earnings before interest and tax (EBIT) fell 38 per cent to $US9.8 billion. This was slightly above the consensus analysts' estimate of $US9.5 billion.
BHP said lower commodity prices - particularly a 28 per cent reduction in realised iron ore prices - were responsible for $US5.4 billion or most of the fall in underlying EBIT.
BHP's powerhouse WA iron ore division generated $US4.6 billion or 49 per cent of BHP's EBIT, down 39 per cent on the previous corresponding half despite record sales volumes from Pilbara operations.
BHP said its earnings were reduced by $US164 million spent on expanding capacity, which would help it increase production.
But the company wrote off $US618 million spent on the proposed $20 billion expansion of the outer harbour at Port Hedland. Mr Kloppers said BHP looked forward to approving one of its most capital cost-effective expansions of the inner harbour instead.
Petroleum contributed another $US3.2 billion or 33 per cent of underlying EBIT, down by $US939 million due partly to a 4 per cent drop in realised oil prices to $US105 a barrel, and a 6 per cent drop in gas prices to $US3.63 per thousand cubic feet.
Underlying EBIT from copper rose by $US326 million, or 19 per cent year on year, to $2 billion, while the metallurgical coal business lost $US101 million in the half, hit by a 37-39 per cent drop in hard and soft coking coal prices.
Underlying EBIT from thermal coal fell by more than two-thirds, from $US787 million to $US246 million.
MARIUS KLOPPERS THE SCORE ON THE BOARD
Oct 1, 2007
Marius Kloppers appointed
SHARE PRICE $44.50
Feb 6, 2008
Launches $100 billion-plus bid for Rio Tinto
Nov 25, 2008
Abandons Rio bid
June 5, 2009
Launches iron ore joint venture with Rio
Aug 18, 2010
Launches $40 billion bid for Canada’s Potash
Oct 8, 2010
Abandons JV with Rio
Nov 15, 2010
Abandons Potash bid
Feb 22, 2011
Buys stake in Chesapeake Energy’s US shale gas fields
Oct 12, 2011
Signs $28.6 billion Olympic Dam expansion
Aug 22, 2012
Shelves Olympic Dam expansion
Sep 6, 2012
Iron ore prices hit three-year low
Nov 6, 2012
Search for new CEO reportedly begins
Feb 20, 2013
Kloppers flags retirement
SHARE PRICE $38.65