BHP Billiton profit tipped to dive, Shares flat: Economy roundup

Concerns are growing about some big profit falls in the mining industry. Giant BHP Billiton is reportedly preparing to announce a 35% decline in profits when it announces full year results next month, according to The Age.

The report claims that full year net profit will fall from $US15.39 billion to under $US10 billion for the 2009 financial year, despite better than expected results for all commodities save iron ore.

“Given its safety issues, BHP was always going to come in with a lower number, so this was not entirely unexpected,” DJ Carmichael & Co mining analyst James Wilson told Reuters. “But iron ore is less important to BHP, which has its butter spread thinner than Rio and can make it up in other commodities, where Rio cannot.”

Chief executive Marius Kloppers will deliver the company’s results on 12 August.

Meanwhile, Santos, the country’s third largest oil and gas producer, announced that second quarter production has fallen by 4%, but the company has reaffirmed production guidance figures.

The company also said weaker oil prices have led to a 35% decline in revenue for the first quarter, down to $484 million. But the company managed to produce 13.4 million barrels of oil equivalent in the June quarter, down from 13.9 million during the year-ago quarter.

The company’s shares dropped by 0.4% to $14.76 in early trade.

Shares flat

The Australian sharemarket has opened flat today after similar results from the US, where Morgan Stanley recorded a third consecutive quarterly loss.

The benchmark S&P/ASX200 index was down 12.1 points or 0.3% to 4056.4 at 12.00 AEST. The Australian dollar continued to remain steady at US81c.

ANZ shares lost 0.9% to $16.75, while Commonwealth Bank shares also dropped 0.1% to $39.06. Westpac gained 0.1% to $19.83 while Woolworths lost 2.7% to $26.83.

NAB capital raising sends shares down

NAB shares have fallen 4.7% to $22.46 after the company announced the completion of a $2 billion share placement, which it said had been oversubscribed.

The lender said 93 million new shares have been sold at $21.50 each, while the settlement of the placement is scheduled to take place on 29 July.

“This capital raising not only ensures we maintain a strong balance sheet position, but also provides us with the flexibility to support our existing customers, accelerate initiatives to enhance our SME market position, and pursue additional organic and strategically aligned inorganic opportunities,” NAB chief executive Cameron Clyne said in a statement.

Meanwhile, Macquarie Infrastructure Group said it is unaware of any reason behind an increase in its share price, which rose from $1.39 on Tuesday to $1.57 on Wednesday.

The group also said it had not made any decision on a number of options put before it to improve value for security holders, but is examining a range of possibilities before a meeting with manager and adviser Macquarie Group.

“No decision has been made by the MIG boards to pursue any particular option,” the group said in a statement to the ASX in response to a share price query.

US stocks as Obama sees stabilisation

In the US, Morgan Stanley announced a third consecutive quarterly loss with disappointing results for fixed income and asset management.

The company reported a $US1.26 billion loss, with net revenue declining by 11% to $US5.4 billion. The company recorded a loss of $US1.37 a share, a much larger loss than expected by analysts, who expected US53c per share, according to Reuters Estimates.

The Dow Jones Industrial Average dropped 34.68 points or 0.39% to 8881.26. Apple results helped push the Nasdaq Composite Index up 10.18 points or 0.53% to 1926.38.

In Washington, President Barack Obama commented on the country’s rising debt levels, saying debt combined with a high deficit are “deep concerns”.

“The debt and deficit are deep concerns of mine,” Obama told reporters during a televised news conference from the White House. But he also said that there is now “stabilisation” in the financial system. .

“We’ve stepped away from the brink,” Obama said.

Also in Washington, US Federal Reserve chairman Ben Bernanke has taken part in a second day of testimony to the Senate Banking Committee, saying the central bank wants to keep monetary policies and political operations separate.

“We do think that the Congress has the right to see how we are using taxpayer money. Where we are concerned is that the Congress would be intervening in our specific policy decisions relating to monetary policy and the economy,” Bernanke said when asked about any chance of expanding the role of the Federal Reserve.

“So yes, we are quite willing to work with Congress to try to figure out exactly where the line should be,” he said.