BHP Billiton is a believer in the returning boom and can explain it, as it did to its Australian AGM yesterday, in one word: China.
"Over the past six months, we have seen quite a rebound in commodity prices and in particular, the velocity of the recovery in China has indeed been surprising," chief executive Marius Kloppers told the AGM in Brisbane yesterday.
"One element that continues to surprise us, however, is the resilience of the Chinese steel sector.
"We have no reason to change our long-held view that Chinese growth will continue and will continue to be resources-intensive," Mr Kloppers said.
"China has been the major and sometimes only source of demand for commodities in 2009.
"While this demand represented both restocking and underlying demand, we do believe that restocking in China is now essentially complete.
"One element that continues to surprise us, however, is the resilience of the Chinese steel sector.
"Outside of China, we saw steel capacity usage fall to 50 per cent in the three major steel markets of the US, Europe and Japan.
"We are now seeing the usage rate climb as the first evidence that restocking in the major economies has commenced.
"However, the restocking in the US and Europe is progressing very cautiously.
"Even though market sentiment has improved since I spoke at our London AGM a month ago, we continue to believe that we will come out of this recession less strongly than in previous cycles.
"Having talked about the near term outlook, we have no reason to change our long-held view that Chinese growth will continue and will continue to be resources-intensive.
"We will maintain our focus on long-term growth in production capacity to meet these needs.
"This is where our strategic focus really comes into its own.
"We remain uniquely positioned to capitalise on the opportunities before us. Our low gearing, strong cash flow and portfolio of investment options means we will continue to create sustainable, real value from the long-term demand for our commodities.
"Because of this disciplined approach we have, over time, built a portfolio of exceptional assets that has allowed us to deliver an Underlying EBIT margin for the 2009 financial year of more than 40 per cent.
"Our focus on disciplined capital management ensured we were better prepared than most to not only manage through the downturn but to continue to invest substantially in growth. Over the last year we approved four growth projects worth $5.9 billion.
"This brings our pipeline of projects currently in execution to about $14 billion.
"During the 2010 financial year we intend to invest approximately $10 billion in capital and exploration expenditure.
"We also managed our balance sheet to leave us well-positioned to take advantage of any opportunities the current market delivers, such as the Western Australia iron ore production joint venture.
"This joint venture will see us invest a further $5.8 billion beyond the already sanctioned projects.
"That project is due to be wrapped up in talks between Rio and BHP by a week tomorrow, December 5."
Retiring chairman, Don Argus, told the meeting that while BHP believed the global recovery will be sluggish; "we also continue to believe there will be strong long term demand for our products from the Asian region.
"The real driver of China’s growth is industrialization and urbanization of its cities.
"The scale of construction required to support the mass migration going on in India and China from rural to city areas is almost beyond comprehension.
"But as nations industrialize and urbanize, the commodities we produce are critical to their growth.
"BHP Billiton is well positioned both financially and operationally to meet the resource needs of both the developing and developed economies as they return to health."
BHP shares rose 61 cents to close at $41.80 yesterday
Woolworths maintained its sales and earnings guidance for the 2009-10 financial year at yesterday’s AGM.
Chief executive, Michael Luscombe told shareholders at its annual general meeting in Sydney that while the company had entered its new fiscal year in an optimistic mood, there were uncertainties, such as rising interest rates.
"And whilst consumer confidence has started to recover, we believe many consumers have actually learned some lessons about how to manage their income more effectively and the quest to extract the best possible value will continue for some time to come," he said.
"Frugalism is a defining feature of the Australian consumer right now.
"Whilst we have started the 2010 financial year optimistically, there are still a number of uncertainties facing the economy, such as rising interest rates.
"Subject to this uncertainty, Woolworths reconfirms its guidance as follows:
The company expects 2009-10 sales to grow in the upper single digits, excluding petrol sales.
It expects earnings before interest and tax to continue to grow faster than sales and for net profit after tax to grow in a range of "8 to 11 per cent."
Woolworths lifted net profit
