BHP Billiton profit to smash Australian corporate record

Global mining behemoth BHP Billiton is set to unveil the biggest annual profit in Australian corporate history after using its production muscle to take advantage of high prices in a booming commodities market.

The dual-listed company, which reports in US dollars, is set to post a 2004/05 net profit around US$6.3 billion ($9.15 billion) before one-off items, an average of forecast from six analysts shows.

The result due on Wednesday will translate to A$8.3 billion ($9.07 billion) in local currency terms and will smash the last Australian profit record of A$4.90 billion set in 2003/04, also by BHP Billiton.

CommSec senior materials analyst Peter Harris said the profit would be a record and the market will be expecting an upbeat assessment from the company on commodity and energy prices for the current year.

However, there issue of production costs could weigh in an industry where labour and equipment is in short supply.

"We understand the supply of mining equipment and skilled labour is pretty tight, but both Woodside Petroleum and Rio Tinto have been able to keep costs relatively under control," Mr Harris said.

"And in an environment with such high commodity and energy prices you are willing to spend a bit more money to increase volumes."

Broking house USB said the miner is "running flat out" to keep production in pace with demand while managing increased costs.

Analysts began upgrading their earnings forecasts for the company in July following its strong production report.

BHP Billiton announced a record annual iron ore production to take advantage of high prices for the resource driven by pent up demand from China.

The global miner produced a record 96.7 million tonnes of iron ore and had timed its production lift to coincide with a 71.5 per cent increase in contract prices, which came into effect on April 1 -- the impact of which would have been felt in the final quarter of last year.

UBS soon after raised its profit forecast for the miner by 0.5 per cent to US$6.31 billion.

Investors will also be looking for an update of the integration of WMC Resources, after BHP Billiton won control of the miner in June after paying A$9.2 billion, and its future contribution to the production pipeline.

GoldmanSachs JBWere analysts said there was little doubt that record production last year will drive the result, which they predict will come in at US$6.41 billion.

A bullish CommSec is forecasting BHP Billiton to report a net profit of US$6.9 billion.

BHP is already the world's biggest diversified miner, but the WMC acquisition pushed it even further ahead of rivals, Rio Tinto and London-listed Anglo American.

In contrast, analysts are forecasting Rio Tinto to post a full year result around a comparatively modest US$4 billion -- although that's still more than double the year earlier outcome.

BHP Billiton's first half net profit was US$2.76 billion, up from US$1.21 billion.

- AAP