BHP, Rio expected to report lower profits

Weaker commodity prices, global growth concerns set to weigh on earnings results.

Mining giants Rio Tinto Ltd and BHP Billiton Ltd are expected to unveil sharply lower full-year profits during the upcoming earnings season as the mining boom tapers off and concerns over global growth and commodity prices weigh on the resources sector, The Australian reports.

According to the newspaper, while both miners are tipped to post massive profits from iron ore, the view that strong supply growth will eventually undercut prices for the metal has many analysts concerned about the group's longer-term standing (see Tim Treadgold's Re-examining Rio).

The Australian reports analysts are expecting Rio to report underlying full-year earnings of $US4.23 billion ($A4.75bn), a steep 8.6% decline on 2012's $US5.2 billion. 

The broad expectation for BHP is a 26% decline in full-year profit to around $US12.5 billion.

Meanwhile, The Australian Financial Review reports the upcoming earnings season may be disappointing right across the board.

According to the newspaper, Credit Suisse analyst Damien Boey expects a gloomy set of numbers and restrained outlook from the nation's listed companies.

"A lot of mining services and construction companies have yet to come clean so we will probably see more downgrades and write-downs or issues with costs and margins," he told the AFR.

"In the short term we are still expecting to see some of the weakness in the global economy and resources flow through to the numbers."