BHP Billiton Ltd has reported a 71.5 per cent rise in first half net profit and says it is confident of the outlook for commodities as emerging markets continue to drive growth.
The mining giant reported net profit of $US10.524 billion ($A10.51 billion) for the six months to December 31, up from $US6.135 billion ($A6.13 billion) in the first half of 2009.
Revenue grew by 39 per cent to $US34.166 billion, up from $A34.14 billion in the prior first half.
BHP says stronger realised commodities prices boosted underlying earnings before interest and tax (EBIT) by 74.4 per cent over the prior corresponding period, at $US14.829 million ($A14.82 million).
BHP says it is launching an expanded $US10 billion capital management program and will buy back $US22.6 billion worth of shares, or 15 per cent of issued capital.
The company says it is "cautiously optimistic on the short term outlook for the global economy, given the continuation of robust growth in emerging markets and further positive signs of a sustainable recovery in major developed economies such as the United States.
"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," BHP said in a statement.
China's twelfth five-year plan, due for release in March, would have significant implications for commodity demand in the medium term.
"We expect a slower but more sustainable economic growth model to lead to a reduction in resource intensity per unit of GDP, however absolute demand for our commodities is likely to remain strong," the company said.
"Longer term, we remain confident in the outlook for our core commodities based on emerging markets being the principal drivers of growth."
The threat of inflation loomed as a "serious challenge" for the growing economies of China and India and would "inevitably bring further tightening measures".
"We expect that the Chinese government will continue to control loan growth as it strives to dampen investment from unsustainable levels while restructuring its economy from being investment driven, to consumption led."
BHP said further high commodity prices were to be expected, as adverse weather in Australia, Brazil, Colombia, South Africa and Indonesia had significantly impacted supply leading to tighter market fundamentals for coal, iron ore and copper.
"There will likely be a lag effect before normal levels of production flow through to the supply chain," BHP said.
BHP Billiton said it would use its balance sheet strength to embark on "significant investment" in organic growth, expected to exceed $US80 billion over the next five years".
On the downside, BHP was feeling the impact of industry-wide cost pressures with tight labour and raw material markets presenting a challenge.
BHP said broad and increasing cost pressures were evident across the group over the first half of 2010/11 and reduced EBIT by $US521 million.
"Higher fuel and energy prices (of which BHP Billiton is a net beneficiary), together with increased maintenance, labour and contractor costs, accounted for the majority of the impact and reduced underlying EBIT by US$468 million."
The weak US dollar also worked to reduce underlying EBIT by $US1,132 million, with Australian operations most heavily affected, while the strong Australian dollar cut underlying EBIT by $US909 million.
BHP declared an interim dividend of 46 US cents per share, fully franked, up from 42 cents, fully franked, in the prior corresponding period.
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