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Global crisis halves BHP profit -

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Reporter: Peter Ryan

BRENDAN TREMBATH: The company once known as "The Big Australian" has posted a massive profit slide
because of sinking commodity prices and a dire global outlook.

BHP Billiton says its first-half profit has more than halved.

Delivering the worse than expected result, the chief executive Marius Kloppers admitted he didn't
see the global economic meltdown coming.

Here's our business editor Peter Ryan.

PETER RYAN: Marius Kloppers has been at the helm of the world's biggest miner for the past 18

During that time he's developed a reputation for straight talk and today, reflecting on the
worsening global outlook, he became a contender for delivering the understatement of the year.

MARIUS KLOPPERS: The last half year has been interesting.

PETER RYAN: That calm and measured view in the face of sinking commodity prices and shrinking
demand came as Mr Kloppers announced a 57 per cent fall in half-year profit to $US2.6-billion.

A worse result was only propped up by a final burst of demand from China, heralding an end to the
multi-billion dollar boom time profits BHP has enjoyed until now.

But in a frank admission, Marius Kloppers says he might have been blinded by overly optimistic
forecasts that persisted this time last year.

MARIUS KLOPPERS: It's safe to say that we, like all and most other people did not see the speed or
the dramatic nature of the downturn that has occurred.

Which is simply unlike anything certainly I have seen before, and what those at the company that
have been here even longer than I have, unlike anything anyone has seen.

PETER RYAN: Reviewing the final six months of 2008, Mr Kloppers outlined a rapid change in
sentiment as the resources boom hurtled towards potential bust amid growing evidence that BHP would
not be immune from the global downturn.

MARIUS KLOPPERS: We went from, at the beginning of that period, extremely tight conditions, almost
panic buying, to very weak conditions at the end. Commodity prices changed by between 50 and 60 per
cent for the main commodities in our portfolio.

And as we stand here today, we probably described the further outlook as continuing to be weak,
uncertain and volatile.

PETER RYAN: Up until late November, BHP had been courting its chief rival Rio Tinto as part of a
$60-billion mega merger.

The bid was abruptly cancelled when Rio's board said no, and BHP was confronted with a
multi-billion dollar debt bill it would inherit from the Rio balance sheet.

But Marius Kloppers says the failure of the Rio bid, had nothing to do with luck or good timing.

MARIUS KLOPPERS: Look, you have to take it as red, that right from the start of that bid, we knew
what potential roots the bid could take. While in hindsight this downturn couldn't be foreseen I
think by anybody, the speed and nature, the fact that it played out as it did, you know, wasn't all
just blind luck.

There was a lot of pre-planning into it, in order to plot how different scenarios could unfold.

PETER RYAN: As a result of falling demand for oil and metals, BHP has already flagged plans to shed
six per cent of its workforce.

Mr Kloppers says the decision to sack staff is the toughest part of what's becoming a tougher job.

MARIUS KLOPPERS: The most difficult aspect is always dealing with the human impact of the decisions
you've got to take.

I would say that it would probably feature as the thing that has been on my mind and obviously as
the economic environment unfolds, you always worry about will there be more human impact.

And that's something that is never pleasant, doesn't matter how many business cycles you've been

PETER RYAN: While BHP announced no new plans to slash jobs, Mr Kloppers says he'll do what's
necessary in the months ahead.

MARIUS KLOPPERS: If the demand outlook continues to weaken, you know, we will continue to take the
actions that are required.

PETER RYAN: BHP Billiton isn't the only corporate giant dealing with a challenging economic

Qantas today announced a 66 per cent drop in first-half profit, down to $210-million. The airline
is hurting from last year's high fuel prices, a weaker Australian dollar and a major downturn in
international travel.

At the same time, Qantas confirmed it was raising half a billion in new capital to protect its
balance sheet from turbulent times ahead.

BRENDAN TREMBATH: Business editor Peter Ryan.