What the big miners see coming this year is just as important to investors as the profit numbers they are currently posting.
BHP was the latest to file this morning, reporting that revenue fell by 17.5 per cent from $US29.8 billion to $US24.6 billion in the December half versus the same half in 2008.
Stripped of one-off charges in the December 2008 half, mainly on the closure of the Ravensthorpe nickel mine and Yabalu nickel refinery, underlying earnings before interest and tax were down 28.5 per cent to $US8.5 billion, slightly better than expected.
BHP chief executive Marius Kloppers said BHP saw better prices for its commodities in the December half than in the June half, but added that they were below levels seen in the December 2008 half, and he was still cautious about the short term outlook.
BHP continued to believe that the Western world’s economic recovery was fragile, he said, adding that government stimulus that pulled western economies out of the global crisis was unsustainable.
Government borrowing had effectively displaced household and business borrowing during the crisis, and BHP would watch with interest to see how a resumption of normal conditions would occur, he said.
Kloppers went on to say that BHP remained bullish about the long-term demand growth story for commodities, one that revolves around increasing supply-side tightness and price pressure accompanying the emergence of rapidly industrialising and urbanising economies, led by China, but followed by India and others.
But he was more guarded about the outlook this year than Xstrata's boss, Mick Davis, who last week announced a 41 per cent profit fall for his global mining group in 2009, but also said that the medium-term outlook for commodity demand remained ‘‘very promising’’.
Many of the short-term leading economic indicators that Xstrata monitored were showing signs of recovery, Davis said - although he did add the caveat that normal growth in the OECD economies would still take time.
There’s more than style and syntax in the comments by the two CEOS: all the big global miners subscribe to the long-term growth story, but BHP has been more cautious than its competitors about the pace of economic recovery for some time, and Kloppers said today he had seen nothing that would change that view.
The next outlook comes tomorrow, from Rio Tinto chief executive Tom Albanese, when Rio reports its December year result.
mmaiden@theage.com.au
The Age
