BHP Billiton results have hit the streets this morning

BHP Billiton results have hit the streets this morning. OK, so first things first, let us dive into the numbers, I hope you brought your swimming trunks and towel. Sales increased 5.2 percent to 52.798 billion Dollars, that translates at current exchange rates to 390 billion Rands worth of sales, more or less. Profits of 12.722 billion Dollars, up 116 percent, that equates in Rand terms (using the current exchange rate) to 94 billion Rands worth of profits. Gearing is negligible, down to 6 percent or 3.3 billion Dollars in total.



Basic earnings per share of 228.6 US cents per share, the dividend increased to 87 US cents for the full year, 45 US cents for the second half versus 41 cents last time around. Operating cash flow of 17.92 billion Dollars. Holy smokes. They are still talking to Rio Tinto regarding the Pilbara Iron Ore JV and of course proceeding with the Potash Corp. acquisition, in case you have not been paying attention. OK, towel off, because now your attention is required after a results swim.




How do they see the short to medium term: "BHP Billiton remains cautious on the short term outlook for the global economy. After a period of rapid recovery in the developing world, economies such as Brazil and India have returned to full output and the focus has now shifted away from supporting growth, towards controlling inflation. In China, the government has implemented meaningful measures aimed at controlling rapid economic expansion and asset inflation."



And whilst the Chinese authorities continue to put the brakes on the economy, this is going to happen "....we do expect Chinese Gross Domestic Product (GDP) growth to slow towards the more sustainable level of circa eight per cent in the first half of fiscal year 2011." And the developing world is making progress, but still continues the deleveraging cycle.



Contributions, on an EBIT basis, Iron ore is a 30.5 percent contributor, Petroleum 22.8 percent, with Base metals contributing 23.4 percent on the same basis, to make these three divisions around three quarters of EBIT. These three combined are also their most profitable divisions combined they only make up just over 57 percent of the sales mix, with the Iron Ore division having the widest EBIT margins, 54 percent, versus 53 percent in the petroleum division. Base metals at a very comfortable 49 percent.



What to do about Potash Corp. now? Gearing in the 2002 to 2005 period was around 35 percent. They have a committed facility of 45 billion Dollars at a great rate. Their reasons for wanting to acquire Potash Corp. as per their slide presentation: "Accelerates our entry into fertilisers; Potash is an attractive commodity; PotashCorp has Tier 1 assets; Further diversifies the portfolio; Fully funded offer which preserves financial flexibility and We remain committed to a solid A credit rating."



We will take a detailed look at these results and write to clients inside of the next two days. Before the week is out, in other words. But so far so good, the results have been met with a muted reception, albeit against the backdrop of a skittish bunch of participants. So in other words the results are about inline with expectations.