BHP and Anglo set for record results

Marion Dakers
BHP BILLITON is expected to best its mining rivals with around $15bn (£9.4bn) profit when it reports half-year results on Wednesday.

Expectations are high for the Anglo-Australian miner after bumper results from Rio Tinto and Xstrata last week on the back of soaring commodity prices.

Analysts at UBS have forecast underlying earnings of $10.7bn, with some cost inflation offset by booming iron ore prices.

The analysts are also looking for an update on the impact of the storms in Queensland, Australia, which brought the area to a standstill before Christmas.

Other industry-watchers are expecting even higher profits, as the price of iron ore, copper and zinc have all made massive gains in 2010. The company is on track to easily surpass its previous record annual profit of $19.6bn when it reports its full-year results in June.

Reports yesterday suggested that BHP could also beef up its share buyback programme to around $10bn in an effort to smooth relations with shareholders, who have watched the collapse of three blockbuster deals in the last couple of years and are clamouring for better returns.

BHP’s takeover of Rio Tinto fell through in 2008, and last year the Canadian government blocked BHP’s $40bn takeover of Potash Corp. An iron ore joint venture with Rio Tinto was also shelved last year.

BHP will be under pressure from investors, who have seen Rio Tinto raise its buyback to $5bn and double its dividend pay-outs last week.

However, analysts are also expecting capital expenditure of more than $15bn during 2011, which could eat into the cash set aside for shareholders.

Anglo American, which reports its full year results on Friday, is expected to double its net profit to $5bn.

Analysts are expecting a bullish outlook on the commodities markets from chief executive Cynthia Carroll, following on from a 34 per cent rise in profit last week from diamond firm De Beers, which is 45 per cent owned by Anglo.