Kloppers opened his remarks by saying that, “2009 has probably been the most challenging year that I can recall. Within a 12-month period we went from exuberance and an environment where the industry could not satisfy rampant commodity demand to one in which demand simply evaporated, and then more recently we have seen stabilization.”

BHP Billiton reported a 15.6% yearon- year decline in revenue from $59.5 billion to $50.2 billion. Earnings before income and taxes (EBIT) fell 20.5% from $24.3 billion to $18.2 billion, and, Kloppers said, “In absolute terms, and in the context of the environment that we have experienced, $18 billion of EBIT is a very significant result. The two highlights for me in today’s presentation are the fact that we achieved record cash flows of $18.9 billion and, secondly, an EBIT margin of 40%. Both of these results prove the strength of our asset portfolio in the face of what have been very challenging external market conditions. As a result of this exceptionally strong cash flow, our balance sheet remains strong, with net gearing at 12%.”

BHP reported attributable profit of $10.8 billion excluding exceptional items, down from $15.4 billion a year earlier. Net exceptional items including tax considerations totaled $4.8 billion and knocked the realized attributable profit down to $5.9 billion from $15.4 billion a year earlier. Net exceptional items included write-downs of $2.5 billion relating to closure of the company’s Ravensthorpe nickel operations and $685 million relating to the announced sale of its Yabulu nickel refinery, both in Australia.

A statement accompanying the BHP Billiton financial results offered a brief review and outlook of the markets for the company’s commodities. Demand remains constrained in the developed economies, the statement said, but demand returned in China and India earlier than many expected as those economies began to rebuild inventories. In China, re-stocking coupled with stimulus- package spending has fueled strong real demand in key commodity-intensive industries such as infrastructure, construction and real estate. Commodity restocking in China appears to be largely complete, the statement said, and nearterm future demand will likely reflect real end-user consumption.

In North America, Europe and Japan, demand is improving, the statement said, but it is too early to tell if this improvement is driven only by re-stocking or a combination of re-stocking and real demand. Real demand following the current round of stimulus spending will be the key to a sustainable price recovery. Also, the potential for continued increases in commodity prices over the short term based on improving demand should be viewed in the context of likely supply increases based on latent capacity across the industry.

Over the long term, BHP Billiton continues to expect strong growth in demand for its commodities and also expects prices to continue to be driven by the long-run marginal cost of supply. With reduced capital investment by the mining industry over the past year, the company anticipates that supply may struggle to keep pace with demand in the medium term when growth recovers.