BHP Billiton has forecast a massive drop of over $1 billion from its half year profits due to the global financial crisis.
Market analysts have predicted that profit for the first half of the financial year will come in at a significantly lowered $5.7 billion.
This expected profit is a 16.6% drop from the same time last year, when the miner recorded a profit of around $7 billion.
BHP’s total earnings before interest and tax (EBIT) for the year are forecast by the market to be approximately US$7.9 billion, down from the US$11.89 billion the miner recorded in the last December half year.
However, it will still pay a dividend.
Though the dividend is expected to be lower due to the increased strength of the Australian dollar against the greenback, upon which the dividends are calculated.
Despite this, BHP still retains a strong balance sheet and strong cash flow.
These latest predictions come on the back of BHP Billiton’s announcement that it is increasing expenditure.
While the miner had previously stated it would spend US$21 billion for the current financial year, with US$10 billion for costs, US$5 billion for dividends and US$6 billion on its iron ore joint venture, it has since announced an additional US$3 billion in capital for the expansion of its Newman iron ore business in the Pilbara as well as an acquisition of a Canadian potash company.
BHP is continuing in its joint venture procedures with Rio Tinto for their Pilbara iron ore operations.