BHP Billiton to Buy Back $10B in Shares
biz.yahoo.com
Wednesday February 7, 5:53 am ET
BHP Billiton to Buy Back $10 Billion in Shares, Says Net Profit Rose 41 Percent
SYDNEY, Australia (AP) -- BHP Billiton surprised investors with a $10 billion share buyback Wednesday as it announced its net profit jumped 41 percent to a record $6.2 billion for the half-year through December.
The world's largest miner also announced that Chief Executive Chip Goodyear will retire by the end of 2007 after five years of overseeing rapid profit growth.
"After nine years with the company, and what will be five years as CEO, I have decided it is an appropriate time for the organization to transition to the next generation of leadership," Goodyear said.
The Anglo-Australian miner's revenue for the first half climbed 22 percent to $22.1 billion, driven by soaring commodity prices as demand from China and India remained solid throughout 2006.
The half-year profit is a record for the company but falls just below market expectations, with analyst consensus clustered around $6.3 billion.
News of the buyback plan and healthy profit gain lifted BHP shares 1.56 Australian dollars, or 6 percent, to A$28.24 on the news on the Australian Stock Exchange.
BHP said there are strong internal candidates to replace Goodyear, with analysts tipping South African-born divisional chief Marius Kloppers as the likely successor.
Chris Lynch, a BHP board member alongside Kloppers and Goodyear, is also a candidate and has held the purse strings as chief financial officer. Goodyear said the board will also consider external candidates.
ABN AMRO analyst Rob Clifford said the board will want a chief executive who can find the next major growth target, with the ambitious Kloppers an obvious choice.
"The company needs to move into more of a growth phase with potentially a higher risk profile," Clifford said. "It is about getting someone who has the personality to do that and I think Marius does."
Goodyear brushed aside suggestions the hefty return of funds will limit BHP's ability to pursue sizable acquisitions, and said his impending departure will not be a barrier to dealmaking.
"With regard to significant M&A, it is by no means on hold," he said.
BHP said the China-driven surge in commodity prices was the key to the record interim result, with higher prices boosting earnings by $3.94 billion. Prices are expected to remain above long term averages in the medium term, although cost pressures remain on some projects, it said.
Goodyear said rapid growth in China, India, Brazil and Russia coupled with steady growth in Japan and Europe has eased fears that a slowdown in the U.S. could crimp demand and force commodity prices down.
"A U.S. slowdown doesn't have the same impact on resource demand that it might have had 10 or 20 years ago and it does illustrate the potential that we see coming from emerging countries," he said. |
