BHP Billiton makes $10b profit
BHP Billiton Ltd., the world’s biggest mining company, said Wednesday it plans to return $10 billion to its shareholders after soaring iron ore and copper prices helped its first-half net profit jump 71.5 percent.
The Melbourne-based mining giant said in a statement it was more than doubling its share buyback from the $4.2 billion it announced in November. BHP said it plans to complete the initiative by the end of 2011.
BHP’s net profit for the six months ended Dec. 31 was $10.52 billion, up from $6.14 billion a year earlier, it said in a statement.
Revenue was up 39 percent to $34.17 billion from $24.58 billion.
The company credited its boost in profit to strong demand from emerging markets, such as China, and tight supply for its key commodities, which pushed prices higher. Tough weather conditions in many producing countries, such as Australia — which has experienced record flooding in recent months — cut into supplies of coal, iron ore and copper.
The company said it was “cautiously optimistic” about the short-term outlook for the global economy.
“While we expect a slowdown in the growth rate of global commodity demand in calendar year 2011, the economic environment still underpins a robust near term outlook for our products,” the company said in a statement.
BHP declared an interim dividend of 46 cents per share, up from 42 cents in the prior corresponding period.
Rival Rio Tinto announced its own massive stock buyback last week. The Anglo-Australian miner said it planned to buy back $5 billion of its shares by the end of 2012.
Source: AP
Bank of England report to focus on economy
The outlook for Britain’s ailing economy and the future path of interest rates will be in sharp focus when the Bank of England publishes its latest quarterly report.
The City will be looking for a clearer insight into when policymakers might lift rates from historic lows of 0.5%, while the strength of the recovery will also be under the spotlight after the shock contraction at the end of 2010.
The report follows UK inflation figures which revealed a rise to 4% in January – with Bank governor Mervyn King admitting in a letter to the Chancellor that there were “real differences of view” among the Monetary Policy Committee (MPC).
Since the Bank’s last report in November, official figures revealed the UK economy unexpectedly shrank by 0.5% in the final quarter of 2010 and inflation has continued to soar above target.
The consistently high inflation – now twice the Government’s 2% target – has increased pressure on the Bank of England to consider an interest rate hike. But the shock growth figures dampened this prospect and highlighted the fragility of the economy.
There are fears the UK is teetering on the brink of so-called stagflation, when sluggish growth and high unemployment combine with soaring prices.
In a speech last month, the governor said the UK was facing the biggest squeeze on living standards since the 1920s as inflation moves towards 5% in coming months and wage growth slows down.
Philip Shaw, economist at brokers Investec, said: “The Bank of England quarterly inflation report will give us a better idea of the way that members view inflation risks and therefore should shed some light on interest rate prospects.”
On Tuesday the Governor confirmed expectations for inflation to pick up to between 4% and 5% over the months ahead. Nevertheless last week policymakers voted in favour of holding rates and keeping quantitative easing at its current level of £200 billion.
Bank policymakers have insisted the stubbornly-high cost of living is due to temporary price shocks, such as soaring global commodity prices and the VAT rise last month, and that inflation will drop back in 2012.
Source: Press Association