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MELBOURNE - BHP Billiton, the world's largest miner, said on Wednesday its first-half net profit fell by 2.4 per cent to US$6.0 billion (S$8.5 billion), as it lifted its offer for rival Rio Tinto.
The Anglo-Australian giant said in a statement to the stock exchange that the fall was due to a 1.9 per cent rise in operating costs in the half to December, while earnings were also hit by adverse exchange rates.
The result was below market expectations of a modest rise from the previous first half to about US$6.3 billion and was sharply lower than last year's second half net profit of US$7.5 billion.
Underlying earnings before interest and taxes were, however, up 6.4 per cent at US$9.6 billion and record half-year production had been achieved from seven commodities.
The mining behemoth declared a share interim dividend of 29 cents, up from last year's first half payment of 20 cents.
'The results presented today represent an excellent operating and financial performance,' the company said.
'These results are based on a strong production performance across the breadth of our business, outstanding cost control in the face of significant cost pressures and additional volumes from newly commissioned growth projects.
'In particular, record half-year earnings results in iron ore and manganese demonstrated that we were able to capture strong market conditions in the steel-making sector.' The company said that while the pace of global economic activity had moderated, Asian economies led by China and India 'have shown little sign of slowing.
'Rapid economic growth in China has continued, led by increasing domestic consumption, strong industrial production and rapid growth in exports and investment.
'In India, economic growth is being driven by robust investment while inflation has recently been contained through a combination of fiscal and monetary policy measures,' the statement said.
The firm said its underlying earnings before interest and taxes were reduced by US$506 million because of a weaker greenback, particularly as measured against the Australian dollar.
Revenue for the half rose 15.5 per cent to US$25.5 billion as operations expanded and commodity prices remained strong, the company said.
'For the first half of financial year 2008, average prices for almost all of our major commodities have been higher than the prior year's average prices,' it said.
BHP said sustained robust demand, continuing supply side constraints and a weakening of the US dollar, relative to currencies of natural resource producing countries, had contributed to the higher prices.
It said bulk commodity spot prices have continued to increase, driven by ongoing strong demand from China and India and continuing supply-side pressures.
'Accordingly, we expect bulk commodity contract prices to remain strong,' it said.
Bid for Rio Tinto
But the day's focus was on BHP's renewed bid for rival Rio Tinto as it made a formal offer for the world's third largest mining group.
BHP said it would raise its offer to 3.4 of its shares for each Rio Tinto share, up from its original 3-for-1 offer. -- AFP
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