BHP Billiton is one of the largest diversified resources company in the world operating in over 50 countries. Core activities comprise the production and distribution of minerals, mineral products and petroleum.

BHP is the only major diversified resources company with a significant oil and gas component. It has a US$14.6bn suite of growth projects under development with a bias to oil and gas. These 14 projects should underpin growth in the medium term. Oil and gas production is expected to increase from the end of calendar 2004 with the start of Mad Dog in the Gulf of Mexico and Angostura in Trinidad. In addition, the expansion of the Mozal aluminium smelter is set to impact in FY2004. Similarly meaningful are the North West Shelf train 4 expansion, Mining Area C in iron ore, the Mount Arthur North Steam coal project and the Ohanet gas project in Algeria.BHP announced an off-market cash offer of A$7.85ps for WMC Resources (WMR), valuing at A$9.2bn (US$7.3bn). BHP has stated that the takeover is in keeping with its strategy of developing and operating large scale, long-life, low-cost assets. It would build on the company's existing nickel and copper businesses and bring uranium to its existing suite of energy products including oil, gas and coal. The offer price reflects what it believes is the considerable expansion potential in WMR. .BHP reported record half yearly EBITDA, EBIT and NPAT. Compared to the pcp, EBITDA rose 67% to US$5,212m, EBIT climbed 95% to US$4,258m and NPAT soared 127% to US$2,757m. An exceptional item of US$56m related to the completion of the sale of an equity participation in the NWS project to CNOOC. This lifted headline NPAT to US$2,813m, a 110% increase on the pcp.Adjusted earnings increased by 131% from US19.5cps to US45.0cps and the dividend rose 67% to US13.5cps, albeit at a lower payout ratio of 30% vs. 41%. BHP reported that US3.6cps of the dividend comprises the US$220m second tranche of the US$2bn capital management programme. The US$1.78m first tranche was completed through an off-market buy-back late last year. In Australian dollar terms earnings increased 112% to 60.8cps and the fully franked dividend of 17.2cps was a 24% gain on the pcp.The result was struck on a 42% increase in sales to US$15,521m. The primarily driver for the record result was higher prices for all commodities lifting EBIT by US$3,035m. Copper, petroleum products, energy coal, manganese ore and alloys, metallurgical coal, aluminium, diamonds, iron ore, ferrochrome and nickel prices all made significant contributions.

30/06/05

Leading Index

ASX 20

Sector Index

Materials

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Materials