Aug. 20 - Top global miner BHP Billiton has missed forecasts with a 15 percent fall in half-year profit, while competitor Glencore Xstrata posted a 9 percent drop in core profit as it wrote down $7.7 billion in assets inherited from Xstrata. Ciara Sutton reports.
Pummeled by billions of dollars in writedowns since the start of the year, with cooling prices and dented demand, two mining giants reveal their half-year results. A write down of assets inherited from miner Xstrata cost Glencore Xstrata over 7 and a half billion dollars. It announced a 9 percent drop in core profit. But improved output from mining operations in copper and coal helped to cushion the full impact of weaker prices. It says its half-year core profit totals 6 billion dollars, at the higher end of analyst estimates. Glencore, which completed its record-breaking acquisition of miner Xstrata in May, says progress on the integration of the group is exceeding expectations. Shares in the company were down over three and a half percent in early trade, underperforming a 2.7 percent drop in the wider sector. Richard Hunter is head of equities at Hargreaves Lansdown. HEAD OF EQUITIES AT HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "These are extremely volatile stocks, they move very much in line with any kind of update coming from China and in terms of what's happening to the economy there. They're certainly volatile and towards the top end of the risk scale if you like within the FTSE100, and I think inverstors need a fairly strong stomach to carry on with that ride." Rival BHP Billiton also took a battering. It missed forecasts with a 15 percent fall in second-half profit , despite slashing costs and raising its output of iron ore, copper, coal and oil. But there is optimism for the sector going forward. HEAD OF EQUITIES AT HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "You've certainly got to look at the longer term story. I mean leading up to where we are today, there has been an element of financial discipline, which we're finally starting to see in some of the mining stocks. Which has been lacking to some extent over the last couple of years. Of course there has also been pressure from share holders to return some of the large amount of capital they continue to generate in the buybacks they're already doing to a small extent and also dividends." BHP Biliton have announced a surprise 2.6 billion dollar investment to advance the company's long-awaited potash project in Canada, extending preparatory work on what will be the world's biggest potash mine.