Business results booming across the Ditch

Australian business profits rose in the three months through June by more than three times the amount estimated by economists as earnings surged at mining companies, builders and banks.

Gross operating profits rose 18.9 per cent in the second quarter from the previous three months, when they climbed a revised 4.3 per cent, the Bureau of Statistics said yesterday.

The median estimate of 19 economists surveyed by Bloomberg News was for a 5.8 per cent gain.

The biggest jump in company profits in nine years adds to evidence of resilience in Australia's economy, which is forecast to accelerate next year as firms led by resources companies such as BHP Billiton boost investment to meet China's demand for iron ore and energy.

A separate report to be published this week will show the economy grew for a sixth straight quarter, according to a Bloomberg survey.

"Australia is enjoying a sizeable boost to national income from a sharp rise" in earnings from coal and iron ore exports, said Bill Evans, chief economist at Westpac Banking in Sydney. "Miners, responding to the high level of commodity prices, plan to sharply boost investment" in the 12 months to June 30 next year, he said.

Profits at mining companies surged 62.7 per cent in the second quarter, builders advanced 30.5 per cent and banks and insurers climbed 28.9 per cent, the report showed. Profits advanced 27.5 per cent in the second quarter from a year earlier.

Australia's four largest lenders - Commonwealth Bank of Australia, Westpac, Australia & New Zealand Banking Group and National Australia Bank - this month reported increased earnings after stemming losses from loans after the financial crisis.

Melbourne-based BHP reported last week a doubling in profit to US$6.59 billion ($9.27 billion) for the six months ended June 30 after earnings at the metals unit of the world's largest mining company jumped more than threefold in the full year.

Giant retailer Woolworths forecast last week that earnings would rise as much as 11 per cent and said it would buy back A$700 million ($884 million) of shares, more than double the amount bought earlier this year.

Robust company earnings were among reasons central bank policy makers led by Governor Glenn Stevens raised borrowing costs six times from October to May, the most aggressive round of monetary policy tightening by a Group of 20 member.

Economists widely expect the 4.5 per cent benchmark cash rate to stay unchanged next week for the fourth straight month.

- BLOOMBERG