BHP Billiton’s $39bn take-over bid for Canada’s PotashCorp is backed by the mightiest finances in the resources sector, the mining company argued yesterday, as it unveiled annual profit margins of 38 per cent and operating cash flows that are five times higher than net debt.
The world’s biggest mining company assessed the global economy’s prospects more sombrely than usual. But even as its cautious outlook tilted towards bearishness, in its financial results for the year to June 30 it reported that annual pre-tax profits had risen by nearly 70 per cent to $19.6bn on the back of higher copper and iron ore prices.
The grand design of BHP’s diversification strategy continued to translate from theory to practice, as relative strength in some of its commodities compensated for weakness in others. The workings of this strategy are especially relevant to the market today as BHP proposes to form a new major commodity business through its all-cash offer for PotashCorp.