The rebound in commodity prices and first production from newly commissioned projects is expected to underpin a 17.5 per cent increase in BHP Billiton’s June year profit to $US12.6 billion.
Despite the profit lift from $US10.72 billion in 2009, the expected result – based on the consensus of more than a dozen local and overseas analysts – will still fall short of the record $US15.3 billion profit BHP posted for the 2008 June year.
The record 2008 year had the benefit of pre-global financial crisis price craziness in commodities. Commodity prices crashed in the wake of the GFC but have since returned to levels that remain well above long-run averages.
Like Rio Tinto before it, BHP’s earnings are benefiting from particularly strong iron ore and coal prices. BHP also gets the advantage of strong manganese prices and oil prices that remain as much as $US60 a barrel above its full cost of production.
BHP is due to report its June year profit after the close of trade next Wednesday (August 25).