BHP warns on commodities

By a staff reporter, with AAP

BHP Billiton Ltd has warned of short-term downward pressure on commodity prices, but expects more balanced global growth over the longer term.

Investors were cautiously optimistic about the report. At 1205 AEST, BHP was 0.49 per cent higher at $36.045, against a benchmark index lift of 0.75 per cent.

In the group's annual review, BHP chairman Jac Nasser said the miner maintained a positive outlook over the long term as the fundamentals of wealth creation, demographics and urbanisation continue to create demand for commodities across Asia and other markets.

"Increased supply has, however, exerted downward pressure on many commodity markets more recently and we expect this trend to continue over the short term," he said.

"While lower rates of investment across the industry will ultimately lead to more balanced markets, all resources companies will need to improve productivity and be flexible enough to adapt to change in this more challenging environment."

He reinforced the company's confidence in the future of the fertiliser potash, following its recent commitment to a further $US2.6 billion ($A2.78 billion) investment in its Canadian Jansen Potash Project.

"A growing population and improving incomes in emerging economies means the longer-term outlook for potash, a fertiliser that improves the yield and quality of agricultural production, is strong," he said.

He said the company had performed well in a volatile and uncertain year for global economies.

BHP's net profit fell by 30 per cent in fiscal 2013 to $US10.9 billion and it lifted its full-year dividend by four per cent to $US1.16 per share.

Most of its profits came from iron ore, petroleum and copper.

Mr Nasser said the company's overall safety performance continued to improve but noted that three BHP workers had lost their lives at work during the year.

The mining giant also said it expects more balanced global growth over the long term as China continues to develop its economy and large developed economies, such as the United States, grow despite fiscal challenges.

"We expect the rebalancing of the Chinese economy to be significant in terms of the nature of domestic demand, as well as the types of goods and services the economy will produce," the report stated.

For the current financial year, chief executive officer Andrew Mackenzie will receive a base salary of $US1.7 million, an increase from his previous base salary of $US1.2 million, as well as a pension of 25 per cent of his base salary.

In addition, Mr Mackenzie is eligible for short-term incentives of up to 240 per cent of his base salary, as well as long-term incentives of up to 400 per cent of his base salary, which has a face value of $6.8 million.