GLOBAL mining heavyweight BHP Billiton today announced plans to ramp up its spending despite its interim profits falling victim to the commodity downturn in 2009.
The FTSE 100 group posted a seven per cent drop in profit to $5.7bn (£3.7bn) in the final six months of 2009 as “significant volatility and continued uncertainty in the global economy,” drove profitability down. However it beat forecasts of $5.1bn.
Its profit including exceptional items shot up 134 per cent to $6.1bn thanks to the reversal of an impairment charge for Ravensthorpe.
BHP now plans to ramp up its capital spending to in excess of $20bn next year from the current $12.8bn and said it had the financial might to make “opportunistic” acquisitions.
“Commodity markets will continue to be largely dependent on Chinese and Indian demand,” it said.
“Over the long term we continue to expect emerging economies’ growth to strongly outperform the developed economies as they follow a path of continued urbanisation and industrialisation,” the company said.
In the meantime the drop in commodities prices and unfavourable exchange rates saw global revenue drop 17.5 per cent to $24.5bn.
While commodity prices enjoyed a recovery in the latter half of 2009, realised prices for most of BHP’s products were lower than the prices achieved during the December 2008 half-year.
The strength of operating currencies against a weak US dollar also negatively impacted costs. BHP said that a recovery in demand, particularly across the steelmaking raw materials division, and its first production in three major projects during the six months had helped to stave off further losses.