SYDNEY: Anglo-Australian mining giant BHP Billiton said on Tuesday that its net profit in the year to June slumped 29.5 percent to $10.9 billion, citing slowing global growth and commodity price volatility.
The world’s biggest miner said that lower prices for its key resources, including a 17-percent dive in iron ore, wiped $8.9 billion from underlying earnings of $28.4 billion.
“BHP Billiton delivered robust financial results in the 2013 financial year, a period characterized by slowing global growth and volatile commodity markets,” the miner said in a statement to the Australian stock exchange.
“Economic conditions over the second half of the 2013 financial year were affected by lower-than-expected growth in emerging economies,” it said.
“Weaker trade and soft manufacturing activity pulled growth rates slightly below expectations in China,” the mining firm said.
BHP said that it had managed to reduce costs by $2.7 billion in the year ended June 30, but that was “more than offset” by the significant fall in commodity prices.
Though it saw a 7-percent increase in total production across its businesses , including a 13th consecutive annual output record at its flagship Pilbara iron ore operations in Western Australia, BHP said that the value of its products was “substantially” down over the year.
Iron ore prices were 17 percent lower, costing BHP $4.1 billion, and steelmaking and energy coal both declined, wiping a further $3.7 billion off the bottomline.
Oversupply in the nickel and aluminium markets and concerns of a near-term rebalancing in the copper sector had weighed on metals prices, reducing earnings by $1 billion.
BHP said that it expected increased supply across the commodities market to exert downward pressure on prices in the short term, but the balance should right itself “in time.”
“The growth rates for steel demand in Asia are expected to moderate as the Chinese economy gradually rebalances. This rebalancing should support growth in demand for other industrial metals, energy and agricultural products,” it said.
“We expect the rebalancing of the Chinese economy to be significant in terms of the nature of domestic demand as well as the types of goods and services the economy will produce,” BHP added.