Summary – Report Preview

BHP reported underlying EBIT of $15.7B for the six months ended December 31, 2011, up 5.8% from $14.8B recorded in the comparable year-ago period, as revenues rose 9.7% to $37.5B, compared with $31.2B.

The company said that record Western Australia Iron Ore production and stronger bulk commodity and petroleum product prices were the major drivers of the increase in underlying EBIT. Cost pressures continued, as costs reduced underlying EBIT by $1.6 billion during the period, excluding the impact of inflation, exchange rate volatility and non-cash items. Substantial increases in labor and contractor costs accounted for the majority of the increase in cost.

In its outlook, BHP said that Japan and the US, after seeing some uptick in economic activity in the second half of 2011, will see a protracted recovery along with the rest of the developed world, while the disorderly unwinding of European government debt remains one of the key downside risks. In China, the world’s largest importer of iron ore, economic growth rates will moderate, though the long-term outlook remains positive.