BHP unveils plans for $2bn share buy-back

BHP Billiton, the world's biggest mining company, unveiled a 48 per cent jump in half-year profits and a $2bn (£1.1bn) share buy-back programme that will favour the group's Australian shareholders.

The dual-listed Anglo-Australian company said that, given a tax break available in Australia, it made more sense to buy its Australian stock. Chip Goodyear, the chief executive, denied shareholders in the UK plc were being discriminated against.

"The economics benefit everyone. We can buy back Australian shares lower than the market price, because of tax benefits. No such benefit is available here [in the UK]. This allows all shareholders to benefit," Mr Goodyear said.

BHP Billiton said it would return the $2bn over the next 18 months. The programme will start with a buy-back of about $1.1bn of its Australian shares. Last year the company also returned $2bn to shareholders. When the current buy-back ends, it will have returned a total of $11.4bn to shareholders since June 2001.

For the first half of the financial year, net profit rose to $4.4bn, from $3.0bn previously. It was the highest half-year net profit in Australian corporate history. Underlying earnings before interest and tax were 43 per cent up at $6.7bn - strong commodity prices accounted for $2.9bn of this rise.

Mr Goodyear said that demand from China continued to fuel growth and showed no sign of letting up. He said that the Chinese were "very concerned" about anything that might disrupt the supply of raw materials, which fuel growth. For the first half, BHP Billiton sales to China were worth $2.9bn - compared with just $371m for the period in 2002. "We don't see much reason that [China] would be below 8 per cent GDP growth, certainly for the next number of years," he said.

He shrugged off any suggestions that demand for raw materials would peak any time soon. He said the company's operations would be going at optimum rates in the second half. "We are essentially flat out in everything we do and I don't think any of our competitors are any different,"he said.

However, costs were also rising. Mr Goodyear said that 70 per cent of the costs were variable, so that they could come down in time. Also, the costs pressure was a function of having the capacity to meet customer needs. "The bad news is that costs are rising. The good news is that costs are rising," he said.