On Tuesday, the world's largest mining company, BHP Billiton Group, released its financial report for the first half of the fiscal year.
The financial report shows that in the six months ended December 31 last year, due to strong demand for iron ore and other core commodities, the company's revenue remained basically unchanged from the same period last year. However, due to the impact of nickel asset impairment and other provisions, the company's net profit has significantly declined.
However, the company emphasizes that it expects developed country markets to gradually recover, while demand in its largest market, China, remains "healthy".
Asset impairment caused a sharp decline in BHP Billiton's net profit
The financial report shows that in the first half of 2024 fiscal year ending at the end of last year,
BHP Billiton's revenue was $27.232 billion, a year-on-year increase of 6%;
The potential attributable profit from continuing operations was $6.57 billion, slightly lower than the analyst's expectation of $6.73 billion;
The company will pay an interim dividend of 72 cents per share, lower than the 90 cents in the first six months.
BHP Billiton's net profit in the first half of the fiscal year decreased by 86% compared to the same period last year, to $972 million.
Last week, the company announced a $2.5 billion impairment on the value of its Australian nickel assets due to a surge in nickel supply in Indonesia, which has dragged down nickel prices. The company also stated that it will nearly double the reserves used to compensate for the losses caused by the 2015 Samaco Dam breach in Brazil, to $6.5 billion.
In its statement, BHP Billiton mentioned its nickel assets as "facing challenges" over the past six months, and the impairment of these nickel assets "offset the impact of other robust operational performance and overall healthy commodity prices."
The financial report also shows that iron ore remains the most important source of revenue for the company. In the first half of the fiscal year, iron ore prices skyrocketed by 28% and remained at historic highs, prompting major producers such as BHP Billiton to consider developing once stranded iron ore deposits.
The demand in the Chinese market remains "healthy"
BHP Billiton stated in a statement that the lagging impact of global inflation, particularly in the labor sector, will continue into the second half of fiscal year 2024. However, the company expects the global economy to be more balanced, and there is evidence to suggest that the most severe wave of overall inflation has passed, which will have a positive impact on the industry this year.
BHP Billiton expects all of its businesses to achieve annual production and cost targets, and emphasizes that the market demand for its largest customer in China remains "healthy".
BHP Billiton stated in a statement, "After a difficult year of steel and non-ferrous metal demand, the economic outlook of developed countries is expected to improve moderately... China and India are expected to remain relatively stable sources of commodity demand."