BHP Billiton, the world's largest mining company, on Monday posted record net income for the year ended June 30, helped by the rise in commodity prices and the company's ability to raise production levels and pass on higher costs.

BHP, which is seeking to buy its rival Rio Tinto, posted net income of $15.4 billion for the 12 months ended June 30, from $13.4 billion a year earlier. That rise, of 14.7 percent, matched analysts' estimates.

BHP cited "excellent operating performance, cost control and the delivery of high-margin growth projects into strong market conditions" for the results.

Revenue rose 25.3 percent to $59.5 billion. BHP also increased its dividend for the year - to 41 cents a share, from 27 cents - saying it was a "strong signal of our confidence" in the outlook.

"All in all, the results were pretty good," said Stephen Pope, chief global market strategist at Cantor Fitzgerald in London. "Their ability to sell in China and India is still strong."

In July, BHP reached an agreement with the Chinese steel maker Baosteel to nearly double the price of its iron ore for the year to March 2009, matching an agreement reached by Rio Tinto weeks earlier.

Pope said it was in a strong position to keep prices high - something that has raised concerns in China about a possible deal with Rio. "Where else are the customers going to go?"

BHP cited strong profit margins in base metals, iron ore, manganese and energy coal, and petroleum. It was the seventh consecutive year that it had posted a record net income figure.

"We're well set for the future," the chief executive, Marius Kloppers, said during a conference call with analysts. "We have a low-risk growth portfolio; we can contend with all sorts of headwinds and tail winds and still turn in great results."

Kloppers noted, however, that weaker demand from developed economies amid high food and energy prices was bringing "some flow through to the developing economies."

Still, most of the slowdown in demand in emerging economies appeared to be occurring in the light manufacturing sector, he said.

Kloppers said that BHP, which is based in Australia and Britain, was also facing "serious challenges" limiting production expansion amid the surge in demand for commodities in recent years, driven in particular by China, India, Brazil and Russia.

He cited a tight market in skilled labor, power shortages and other infrastructure problems, the emergence of export tariffs and quotas and an effort to secure control over resources in some host countries.

In recent weeks, commodity prices have fallen from their highs, led by oil and metals, pulling down the value of mining stocks. Since the end of April, BHP's stock has fallen 14.6 percent.

Still, from the end of 2004 to the end of 2007, the stock gained 153 percent. It was trading at pound(s)15.35, or $28.63, at midday in London, up 6 pence.

Some analysts said that even if China's economy slowed slightly, as expected, large raw material producers would remain in a good position.

In a recent research report on the sector, analysts at Lehman Brothers noted that China now consumes anywhere from 25 percent to 45 percent of most mined commodities.

"If growth were to slow to 7 percent from 10 percent, that is still substantial demand growth at a time when many obstacles to supply growth remain," the investment bank said.

Kloppers declined to comment in detail on the offer for Rio. BHP wants to buy its rival to cut costs, obtain a bigger share of metals markets and increase its pricing power.

Rio's board rejected a sweetened offer by BHP in February of about $147 billion, saying it "significantly" undervalued the company.

"Our original timetable is unchanged, our basic analysis of the situation is unchanged," Kloppers said. "We continue to belive that we are on very solid ground economically."

BHP faces possible resistance from some regulators and from China, which is wary of dealing with such a powerful supplier.

The takeover plans were provisionally cleared by U.S. regulators in July. But European Union regulators have widened their investigation into the deal and are expected to rule by Dec. 9.

The competition authorities from Australia are still assessing the offer. China, the world's biggest iron ore importer, is reviewing antitrust rules related to the on the takeover bid.

Chinese steel mills want to block the merger because it would give BHP control of almost half the Asian market for iron ore, the main ingredient in steel.

In February, Aluminum Corp. of China, or Chinalco, teamed up with the U.S. company Alcoa to buy a 12 percent stake in Rio Tinto in what was seen as an effort to fend off a BHP takeover.

Pope, the analyst, said BHP remained in a good position as it could walk away from the deal while remaining "very strong alone."

Like its rival Rio, BHP has a dual listing in Australia and Britain.

Originally published by The New York Times Media Group.

(c) 2008 International Herald Tribune. Provided by ProQuest LLC. All rights Reserved.