BHP Billiton (BHP) reported results for the fiscal year 2009. Net income (excluding special items) during the period declined 30.2% year-over-year to $10.7 billion. Earnings per ADR, excluding special items, was $3.85, compared to $5.50 in the prior year period.
Revenue declined 15.6% to $50,211 million from $59,473 million in fiscal 2008, primarily due to a decline in metal prices as a result of the global economic downturn. Costs increased by $2,528 million compared to previous year due to higher raw material costs, increase in labor costs and unexpected events such as the severe weather interruptions in Queensland and the furnace rebuild at the Kalgoorlie Nickel Smelter (Australia).
In response to the weak market conditions, BHP adjusted its production to match demand, suspended/sold cash negative operations, pulled out from its pursuit of Rio Tinto (RTP) and deferred low priority capital expenditures.
BHP generated net operating cash flow of $18.9 billion, up 6% year over year due to higher cash generated from operating activities and a decrease in receivables, partly offset by increases in other working capital items. The company reduced its net debt by $2.9 billion or 34% during the fiscal year.
The company completed six major projects during the fiscal year. Also, BHP said that the Board has approved a total capital investment of $5.9 billion in one iron ore and three oil and gas projects. Further, in July 2009, the company announced the approval of MAC 20 (energy coal) project at Hunter Valley Coal (Australia) operations. These investments reflect the company’s commitment to long-term growth.
BHP’s strong balance sheet with healthy cash generation and low net-debt level enables it to successfully invest in growth projects and positions it to capitalize as markets recover. Despite the market uncertainty in the short term, the company is confident that the ongoing industrialization in China and other developing economies will drive the long-term demand for its products.
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