JOHANNESBURG (miningweekly.com) – Despite a 61% drop in attributable profit, diversified mining major BHP Billiton declared a 17%-higher dividend for the year and generated a record net operating cash flow of $18,9-billion, which enabled the company to reduce its net debt to $5,6-billion and continue to invest $10,7-billion in its capital and exploration programmes.

The financial strength of the group had been a clear competitive advantage during the severe economic downturn, said BHP Billiton's South African CEO Marius Kloppers.

Kloppers said that the company maintained its strong balance sheet, with gearing at 12,1%.

The underlying margin of profit was of 40,1% and the underlying return on capital was 24,6%.

BHP Billiton maintained an interim dividend of US41c a share, which, together with the March dividend of US41c a share, brought the total dividend for the year to US82c a share, 17,1% higher than in 2008.

Imara investment manager Bruce Williamson was impressed with the company being able to generate a record cash flow of $18,9-billion against a background of declines in revenue and earnings as a consequence of last year's collapse in commodity prices.

On the economic outlook, Kloppers said that, if the recent stabilisation in the key indicators persisted, many economies would improve economic output over the short term to rebuild inventory, but structural economic problems would take time to correct and might hold back growth over the medium term.

"It leaves us well positioned to invest in growth and participate in opportunistic mergers and acquisitions," Kloppers said.

There had been no slowdown in BHP Billiton's two energy coal projects in South Africa, with the Klipspruit project still scheduled for production in the second half of this year, which will ramp up to a level of 1,8-million tons a year of export coal and 2,1-million tons a year of domestic thermal coal.

Likewise, the Douglas/Middelburg optimisation project was still on schedule to begin producing in mid 2010, when it would begin ramping up to a production level ten-million tons a year of export thermal coal and 8,5-million tons a year of domestic thermal coal, to sustain current output.

Underlying earnings before interest and tax (ebit) of aluminium, produced on Southern Africa's east coast, tanked at $192-million, an 86,9% decrease of $1,2-billion from the corresponding period. Lower prices and higher operating costs had an adverse impact. This was due to higher charges for raw materials, mainly as a result of increased coke and caustic prices and higher energy costs. Underlying ebit was also adversely impacted on by the closure of the B and C potlines at Bayside Aluminium. Favourable embedded derivatives revaluation increased underlying ebit by $170-million.

The ebit of the manganese business was $1,3-billion, a decrease of $295-million or 17,9 %. Manganese ore sales were 37,9% lower and alloy sales were 37,1% lower than the comparative period to June 30, 2008.