SYDNEY-- BHP Billiton Ltd. said its annual profit rose 23%, as
it detailed plans to create a new company to house assets including
nickel mines and aluminum smelters that would be listed on
Australia's stock exchange.
BHP reported a net profit of US$13.83 billion for the year
through June, after producing more iron ore from mines in the far
west of Australia and deepening cost cuts. The result was in line
with the median US$13.86 billion forecast of seven analysts polled
by The Wall Street Journal.
BHP is overhauling its strategy to focus on producing iron ore,
copper, coking coal and petroleum. Central to that move is a
spinoff of a collection of assets that until recently were a drag
on its earnings.
On Tuesday, BHP said it would create a company to house its
entire aluminum and manganese businesses, plus individual mining
assets that include its Cerro Matoso nickel mine in Colombia and
its Cannington pit in Australia that produces silver, lead and
zinc. The new company will also own its South Africa thermal coal
business and its coking coal operations in the Illawarra, south of
Sydney.
Many of the assets were acquired by BHP in its transformational
takeover of the U.K.'s Billiton PLC in 2001, and the move is the
latest shift within the mining sector away from a broadly
diversified asset base amid a sharp pullback in prices of many
commodities.
"In a single step, we will significantly increase BHP Billiton's
focus on the exceptionally large resource basins that underpin its
competitive advantage," Chief Executive Andrew Mackenzie said in a
statement.
BHP said its Australian investors and holders of its U.K.-listed
stock would get all the shares of the new company via in-specie
distribution.
The new company will be led by BHP's current chief financial
officer Graham Kerr and will be based in Perth. Peter Beaven, who
currently runs BHP's copper business, will replace Mr. Kerr as
CFO.
BHP said it expects to complete the spinoff in the first half of
the 2015 calendar year.
BHP said its annual profits were bolstered by record iron-ore
production, which offset declining earnings from copper, petroleum
and coal. Management expect to increase output again in the current
fiscal year, mainly from Australia, despite concerns among some
investors that demand is unable to keep up with global miners' new
supply.
Melbourne-based BHP lifted its final dividend by 5% to US$0.62 a
share. However, management didn't outline plans for a share
buyback, a move that was widely expected by analysts who predicted
BHP had the firepower to repurchase up to US$5 billion of its own
stock.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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